Gold Weekly Review: Domestic bullion witnesses significant rise, driven by PKR depreciation

July 23, 2023 (MLN): Domestic bullion witnessed a significant rise during this week, mainly driven by the continuous depreciation of the Pakistani rupee (PKR).

24-karat gold closed the week at a rate of Rs222,800 per tola, marking a weekly surge of Rs9,600 per tola, or 4.50%.

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

Accordingly, the surge witnessed in the commodity this week can be strongly linked to the weakening of the domestic currency in the outgoing week.

PKR experienced a total loss of Rs9.22 or 3.21% WoW against the USD in the interbank session, as it closed the week at 286.81 per USD.

It is worth noting that for the first time in FY24, the value of PKR has fallen below the FY23 Close, which was 285.99 per USD.

Earlier this month, gold prices faced downward pressure as investors shifted their preference from safe-haven assets like gold to riskier assets like stocks, owed to Pakistan and the IMF signing a $3 billion SLA on June 29.

The stock market rallied after the deal, with the KSE-100 index crossing the 46,000 points level for the first time in 15 months.

To note, 24-karat gold has witnessed an increase of 3.15% or Rs6,800 per tola month-to-date

The rise in international prices also boosted the appreciation in the domestic market.

As on the global front, international spot gold ended the week with a 0.31% increase at $1,961.73, with a weekly high of $1,987.

International gold daily time-frame chart 

Meanwhile, international spot silver declined by 1.4% to close the week at $24.62.

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