September 09, 2023 (MLN): Domestic bullion over the past week experienced a significant downturn as the Pakistani rupee (PKR) staged a strong comeback against the U.S. dollar.
The 24-karat gold concluded the week at Rs212,000 per tola, witnessing a cumulative loss of Rs27,800 or 11.59% WoW.
It is worth noting that this decline comes after the metal reached its second-highest level of Rs239,800 per tola on August 31, 2023.
The all-time high for 24-karat gold was witnessed on May 10, 2023, at Rs240,000 per tola.
To note, this week's decline completely erases the gains made in all of August, when domestic bullion surged by Rs17,600 or 7.92% per tola, mainly due to a significant decline in the value of PKR and investors' shift towards risk-off assets amid political and economic uncertainty.
However, in the last week, the PKR made a strong comeback as it gained 2.5 rupees in the interbank and 23 rupees in the open market against the greenback.
The domestic unit closed last week at PKR 302.9482 per USD in the interbank market, while in the open market, the dollar was quoted at 301 for buying and 305 for selling.
Gold is denominated in U.S. dollars, hence when the PKR strengthens against the USD, the value of PKR-denominated gold falls.
The strong comeback of the domestic unit can be attributed to the recent reforms introduced by the State Bank of Pakistan (SBP), aiming to consolidate and transform various types of exchange companies into a single category with a well-defined mandate and higher capital requirements.
These reforms also encourage leading banks to establish wholly owned exchange companies to cater to the legitimate foreign exchange needs of the general public.
Moreover, the ongoing crackdown against speculators, hoarders, and smugglers also boosted the sentiment.
Going forward, market participants are closely monitoring the upcoming Monetary Policy Committee (MPC) meeting scheduled for September 14.
International markets
On the global front, declining gold prices also exerted pressure on the domestic market.
International spot gold concluded the week with a 1.07% drop at $1,919.09, hitting a weekly low of $1,915.35.
It is pertinent to note that this decline followed two consecutive weeks of appreciation.
Meanwhile, international spot silver also witnessed a major drop of 5.18% and closed the week at $22.93.
Copyright Mettis Link News
Posted on: 2023-09-10T18:56:01+05:00
