Gold price plunges by Rs4,200 per tola to Rs219,400

December 05, 2023 (MLN): Domestic bullion witnessed a significant downturn on Tuesday as the price of 24-karat gold plunged by Rs4,200 per tola to Rs219,400 per tola.

The Karachi Sarafa Association reported that the price of 10-gram 24-karat gold closed today’s session at Rs188,100 reflecting a loss of Rs3,601.

While 10-gram 22-karat gold stood at Rs172,425, down by Rs3,301.

The price of silver also decreased in the domestic market, with 24-karat silver and 10-gram 24-karat silver closing at Rs 2,620 and Rs 2,246.21, reflecting losses of 20 and 17.14 rupees, respectively.

The significant loss witnessed by domestic bullion today is attributed to a substantial fall in international prices.

Gold price in the international market fell more than 2% after hitting an all-time high on Monday as traders reduced their bets on the likelihood of the first interest rate cut by the Federal Reserve occurring in early 2024.

International spot gold is currently trading at $2,026.48, down by 0.12% on the day.

However, when the association reported the domestic gold rates, international spot gold fell to $2,037, against their previous session’s rate of $2,074.

These rates are exclusive of the $20 premium charged by the association under the agreement between provinces to charge one uniform rate.

The Fed appears on track to end the year with interest rate hikes as a thing of the past, but with a coming challenge over when and how to signal a turn to rate cuts.

As a result, the U.S. Dollar Index (DXY), which tracks the value of the greenback against six other top currencies rebounded strongly in yesterday’s session.

A strong dollar makes gold less affordable for holders of other currencies, exerting a negative impact on gold prices.

On the currency front, the Pakistani Rupee (PKR) recorded its sixth consecutive win against the U.S. Dollar by appreciating over 15 paisa in today’s session.

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

Accordingly, declining international prices and a strong domestic currency exerted pressure on domestic bullion, leading to a significant loss.

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