Gold price in Pakistan drops by Rs2,000 per tola this week

January 06, 2024 (MLN): Domestic Bullion snapped its three-day losing streak on Saturday but concluded the first week of 2024 on a negative note as the price of 24-karat gold dropped by Rs2,000 per tola to Rs218,000.

The Karachi Sarafa Association reported that 24-karat gold closed today's session with a gain of Rs1,000 per tola.

Moreover, 10-gram 24-karat gold settled the last trading session of the week at Rs186,900, reflecting a gain of Rs857.

While the price of 10-gram 22-karat gold stood at Rs171,325, up by Rs786.

It is crucial to mention that domestic bullion investors joyed magnificent investment returns for 2023 as the yellow metal delivered an impressive 19.63% yield for the year.

The 24-karat gold concluded 2023 at Rs220,000 per tola compared to the closing price of Rs183,900 per tola in the Same Period Last Year (SPLY).

The downturn witnessed by the domestic metal market this week is due to a dip in international prices and a relatively strengthened home currency.

International spot gold halted its three-week-long upward trajectory and settled at 2,045.63, down by 0.84% for the week.

Gold prices in the international market followed an upward trajectory earlier this week amid declining yields and a weakened dollar.

However, both U.S. treasury yields and Dollar witnessed a robust rebound this week.

The 10-year U.S. government bond yield surged to 4.05%, in contrast to the rate of 3.866% at the close of the previous week.

Likewise, the U.S. Dollar Index (DXY), which tracks the value of the mighty unit against six other top currencies moved up by 1.04%after experiencing three straight weekly declines.

A stronger dollar makes gold more expensive for holders of other currencies, exerting a negative impact on gold prices.

Similarly, rising bond yields increase the opportunity cost for holding zero-yielding gold, which is bearish for gold.

An additional strain came this week as the Pakistani Rupee (PKR) secured its eighth consecutive win by appreciating 46 paisa further against the mighty dollar.

The positive market sentiments, attributed to the expectations of the approval of the second loan tranche worth $700 million by the International Monetary Fund (IMF), continue to benefit the local currency.

It is worth highlighting that Pakistan has been included in the IMF's meeting agenda for January 11, 2024.

The relationship between the domestic gold price and the local Rupee is that the metal is denominated in U.S. dollars and when the home currency appreciates against the greenback, the value of gold falls.

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