October 21, 2023 (MLN): The domestic bullion saw significant gains this week as the price of 24-karat gold surged by Rs6,350 per tola to Rs208,350 amid rising global prices and a relatively weaker Pakistani Rupee (PKR).
The Karachi Sarafa Association reported that the prices of 10-gram 24-karat gold and 10-gram 22-karat gold settled the week at Rs178,626 and Rs163,859 respectively.
It is crucial to note that this signifies the second consecutive week of gains for the local metal market since its reopening on October 10, following a closure that lasted nearly a month.
The depreciation of the local currency in the interbank market led to gains in the local bullion.
The PKR concluded its 28-day historical winning streak against the USD this week, depreciating by 1.18 rupees against the greenback.
Despite the army-backed crackdown and other administrative measures aimed at restricting illegal dollar outflows, the local unit was adversely affected by the news flow of low dollar liquidity within banks.
Consequently, the currency experienced a significant loss of 3.25 rupees on Wednesday, which ultimately resulted in a weekly loss.
Gold is denominated in U.S. dollars, hence when the PKR weakens against the USD, the value of PKR-denominated gold rises.
Global Markets
The surge in international gold prices, driven by escalating conflicts in the Middle East, further bolstered the gains in the domestic bullion market.
The Israel-Palestine conflict has sparked investors' interest in safe-haven assets, particularly gold due to its stability and intrinsic value.
International spot gold marked its second consecutive weekly gain, rising by $48.54 or 2.51% to close at $1,980.9, a figure not seen since July 2023.
It is noteworthy that last week, international gold experienced its strongest performance in seven months, closing at $1,932.37, with a gain of over $100 or 5.5%.
Recent developments in the local metal market
Haji Haroon Rasheed Chand, the President of the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA) noted this week that disparity still exists in the domestic bullion, with different rates being quoted at Peshawar and Lahore and there lacks a uniform rate.
Nevertheless, an agreement has been reached with all the provinces that a premium of $20 will be charged on the international gold price, and the interbank rates will be used for calculations of domestic gold.
This development came after the State Bank of Pakistan (SBP) authorized all gold dealers to determine domestic bullion rates using the interbank exchange rate.
This will result in one unified rate across the country, thereby ending disparity and contributing to improved transparency.
Additionally, the Federal Ministry of Industries and Production has established a 15-member advisory council to review existing policies related to the gold trade, standards, certification, and value addition.
Copyright Mettis Link News
Posted on: 2023-10-21T15:39:17+05:00
