Gold prices soar for the third consecutive day, reaching Rs226,400 per tola

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MG News | July 19, 2023 at 06:20 PM GMT+05:00

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July 19, 2023 (MLN): Domestic bullion continued its momentum on Wednesday, with 24-karat gold reaching Rs226,400 per tola, soaring by Rs5,400.

The surge in gold prices can be attributed to the depreciation of the Pakistani rupee against the US dollar for four consecutive trading sessions.

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

The Karachi Sarafa Association, a reputable jeweler in the precious metals market, reported that the price of 10-gram 24-karat gold reached Rs194,102 per tola, reflecting a rise of Rs4,630.

Similarly, the price of 10-gram 22-karat gold was noted at Rs177,926 per tola, surging by Rs4,243.

In addition, the price of silver rose in the domestic market, with 24-karat silver increasing by Rs250 to close at Rs2,900 per tola and the price of 10-gram 24-karat silver reaching Rs2,486 per tola, gaining Rs214.34

Moreover, international spot gold is currently trading at $1,978.76, shower a meager rise of 0.07% on the day.

It is worth noting that gold prices were near eight-week highs in the previous session after economic data raised expectations that the U.S. Federal Reserve is near the end of its interest rate hiking, as Reuters reported.

The outlook for next week’s Fed meeting has not changed, but the latest jobs data and inflation figures have begun to anticipate rates could be cut in early 2024, sooner than previously expected, Carlo Alberto De Casa, external analyst at Kinesis Money, said.

“Moreover, markets are almost sure that this rate hike will be the last one for a while,” he added.

The U.S. dollar index (DXY) has risen, currently 0.32% higher on the day, this makes dollar-denominated gold expensive for investors holding other currencies.

CME FedWatch Tool is pricing a 99.8% chance of an interest rate pause at the upcoming FED meeting.

Interest rates and gold have an inverse relationship, as gold loses its attractiveness in an environment of high-interest rates.

Meanwhile, international spot silver is currently trading at $25.20, increasing by 0.63% on the day.

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