July 28, 2023 (MLN): Domestic bullion rose on Thursday, reversing losses of the previous session with 24-karat gold reaching Rs224,700 per tola, rising by Rs2,600.

It is worth noting that gold prices went significantly down by Rs2,400 per tola on Wednesday amid an appreciation in the Pakistani rupee (PKR) against the US dollar.

Since gold is denominated in U.S. dollars, when the PKR appreciates against the U.S. dollar, the value of PKR-denominated gold falls.

According to the Karachi Sarafa Association, the price of 10-gram 24-karat gold reached Rs192,644 per tola, increasing by Rs2,230.

While 10-gram 22-karat gold stood at Rs168,564 per tola.

In contrast, the price of silver remained unchanged in the domestic market, with 24-karat silver to close at Rs2,750 per tola and the price of 10-gram 24-karat silver reaching Rs2,358 per tola. 

On the global front, international spot gold is currently trading at $1,963.20 rising by 0.91% on the day.

The rise in international gold prices came after the commodity witnessed a decline of 1.37% in the previous trading session after data showed that the U.S. economy grew faster than expected in the second quarter and weekly jobless claims fell, boosting the dollar, as Reuters reported.

The U.S. personal consumption expenditure (PCE) for the month of June 2023 clocked in at 3% YoY, compared to 3.8% YoY in May. 

On a sequential basis, US PCE went up by 0.2% MoM, higher than the 0.1% MoM increase in the previous month.

Moreover, the core PCE stood at 4.1% YoY, as compared to 4.6% in the previous month, and lower than analyst's expectations of 4.2%.

“The core PCE, which is what the Fed really looks at, came in line with estimates. It really wasn’t much of a surprise. Also, the dollar is weaker today and is giving a bit of a boost for gold,” said Edward Meir, a metals analyst at Marex.

Both the U.S. central bank and the European Central Bank raised interest rates this week by 25 basis points to 5.25%-5.5% and 4.25% respectively and kept the door open to further tightening.

Rising interest rates increase the opportunity cost of holding non-yielding bullion.

Meanwhile, international spot silver is currently trading at $24.41, rising by 1.17% on the day.

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Posted on: 2023-07-28T23:18:40+05:00