Gold prices slide for 2nd straight week amid diminishing purchasing power

May 05, 2024 (MLN): This week marked the second consecutive weekly loss for the domestic bullion market, with the price of 24-karat gold dropping by Rs6,400 per tola to close at Rs238,000.

The cumulative loss for the yellow metal now stands at Rs14,200 per tola, or 5.63%, over the past two weeks.

The Karachi Sarafa Association reported the price of 24-karat gold also reduced to Rs209,534 per 10-gram, down Rs5,487 WoW.

Similarly, the price of 22-karat gold was quoted lower this week at Rs187,047 per 10-gram.

Gold prices were reaching new heights before these suffering weeks with prices surging past the Rs250,000 mark. However, the aftermath was that the population's purchasing power diminished, which exerted a bearish impact on the yellow metal.

The global rally which delivered gains to the domestic market on rising Middle East tensions and strong demand from central banks to build their reserves of gold has also cooled off.

The diminishing expectations of rate cuts in the U.S. and easing Middle East tensions after Iran's government did not hype Israel's response attack much have reduced premiums on the yellow metal.

International spot gold wrapped the week at $2,301.81, down by 1.55% or $36.24 in a week.

Further pressure was exerted on the domestic metal market on the currency front, as the Pakistani rupee (PKR) recovered all its losses from last week and closed with a gain of around 18 paisa against USD.

The recovery is attributed to the positivity surrounding IMF’s immediate disbursement of around $1.1 billion to Pakistan under the $3bn standby arrangement.

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

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