Domestic gold retreats after nearing all-time high

September 04, 2023 (MLN): Domestic bullion fell on Monday, with 24-karat gold marking a decline of Rs700 per tola to close the trading session at Rs239,100.

According to the Karachi Sarafa Association, the price of 10-gram 24-karat gold reached Rs204,990 per tola, down by Rs600.

While 10-gram 22-karat gold fell by Rs550 to Rs187,907 per tola.

It is worth mentioning that 24k gold closed the month of August at Rs239,800 per tola, nearing its all-time high of Rs240,000 and marking a monthly increase of Rs17,600 or 7.92% per tola.

The gains were attributed to continuous depreciation of the Pakistani rupee (PKR) and investors' shift toward risk-off assets.

Since gold is denominated in U.S. dollars when the local unit depreciates against the greenback, the value of PKR-denominated gold rises.

On the other hand, the price of silver remained unchanged in the domestic market, as 24-karat silver closed at Rs2,900 per tola, and the price of 10-gram 24-karat silver stood at Rs2,486 per tola.

On the global front, international spot gold is currently trading at $1,939.9, with a weekly high of $1,940.06, up by 0,05% compared to the previous close.

Gold edged higher on Monday, buoyed by a slight pullback in the U.S. dollar as market participants grew more confident the Federal Reserve may have finished raising interest rates, as Reuters reported.

The Fed is likely done raising interest rates, traders bet on Friday after a jump in the U.S. unemployment rate and moderate wage growth suggested that labor market conditions were easing.

The dollar index eased 0.2%, making greenback-priced bullion more attractive to holders of other currencies.

“More influential for gold going forward is going to be the shifting expectations for the first rate cut from the Fed, but also then the pace of rate cuts thereafter,” said Craig Erlam, senior markets analyst at OANDA.

“September is almost nailed on at this point,” Erlam added, referring to the Fed’s upcoming monetary policy meeting on September 19-20, when markets mostly expect rates to be left unchanged.

Meanwhile, international spot silver is currently trading at $24.06, falling by -0.44% on the day.

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