Gold price in Pakistan hits 6-week high on global upswing

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By MG News | Category Commodity Roundup | July 07, 2024 at 02:52 PM GMT+05:00

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July 07, 2024 (MLN): Pakistan’s bullion market delivered substantial gains to investors as prices reached a 6-week high, buoyed by a significant rise in international rates.

24-karat gold, the key benchmark of the domestic market surged by 4,700 per tola to settle the week at Rs246,400.

The Karachi Sarafa Association further reported that the price of 24-karat gold increased to Rs211,247 per 10-gram, up by Rs4,028 WoW.

Similarly, the 22-karat gold was quoted higher at Rs193,644 per 10-gram.

Despite a positive closure, the bullion market took a major hit as the significant reduction in consumer purchasing power continued to act as a constraint to gains this week.

Gold rates in the country are currently hovering close to their peak levels, with all gains credited to the historical spike in international rates. As a result, gold dealers are forced to underprice the yellow metal to sustain a balanced demand.

Earlier this week, the global rally somewhat cooled off, which led the association to underprice rates by Rs1,500 per tola last week. However, as prices ticked higher in the review week, the underpricing increased to Rs3,500 per tola.

Recently, as the fiscal year 2023-2024 came to a close, the local bullion’s performance was remarkable as investors booked gains worth Rs25,700 per tola or around 12%.

Meanwhile, in June, prices remained stable at Rs241,700 per tola.

Assessing its performance in the international market, it is worth highlighting that gold achieved its best weekly gain since April.

International spot gold wrapped the week at $2,391.62, rising by 2.79% or around $65 per ounce compared to last week’s closing rate.

Data from the Bureau of Labor Statistics released Friday showed signs of a softening labor market in the U.S. which strengthened bets for an interest rate cut by the Federal Reserve in September.

Gold, being a non-yielding asset typically becomes more attractive in an environment of declining interest rates, which is why rates boomed this week.

The data showed that nonfarm payrolls added 206,000 jobs in June, which, although clocked in higher than analysts' estimates, but was fewer compared to the revised downward figure of 218,000 in May.

Moreover, in an unexpected move, the unemployment rate sustained its upward march and stood at 4.1%, the highest reading since November 2021.

Pak Rupee

In the local market, gold prices remain shielded on the currency front as the domestic currency continues to maintain its stable phase against the mighty Dollar.

The Pakistani rupee (PKR) inched lower by 3 paisa against the US dollar last week to settle at PKR 278.38 per USD.

Since gold is denominated in U.S. Dollar terms, when PKR depreciates against the greenback, the value of PKR-denominated gold falls and vice versa.

In FY24, the home currency gained over 7.65 rupees or 2.75% on account of stable economic operations supported by the SBA with the International Monetary Fund and inflows through multilateral and bilateral partners, which boosted the nation’s foreign exchange reserves.

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