Thursday June 13, 2024

Gold continues to shine as rupee registers losses

Gold price rises by Rs500 per tola to settle at Rs199,200

By Business Desk
March 13, 2023
An undated image of a goldsmith showing a necklace to a customer. — AFP/File
An undated image of a goldsmith showing a necklace to a customer. — AFP/File

Amid a delay in the revival of the International Monetary Fund (IMF) programme, the rupee resumed its downtrend which pushed the price of gold upwards in Pakistan.

The price of gold (24 carats) rose by Rs500 per tola and Rs428 per 10 grams to settle at Rs199,200 and Rs170,782, according to All-Pakistan Sarafa Gems and Jewellers Association (APSGJA).

The Pakistani currency lost Re0.84, or 0.30%, against the US dollar in the interbank market which pushed the price of gold in the local bullion market upwards.

Recent events show that gold remains a safe haven asset as it is able to benefit from market uncertainty.

Cumulatively, the yellow metal had shed Rs1,300 per tola during the last week — and it had only registered gains twice as the movement of Pakistani currency remains volatile.

Meanwhile, silver prices in the domestic market remained unchanged at Rs2,120 per tola and Rs1,817.55 per 10 grams, respectively.

In the international market, gold raced towards the key $1,900 level, emboldened by bets that the Federal Reserve may now have to tone down its rate hikes as investors sought cover from uncertainty triggered by the collapse of Silicon Valley Bank.

The per ounce of gold settled at $1,886 after an increase of $20.

Market participants pricing out rate hike expectations are lifting gold, said UBS analyst Giovanni Staunovo. Lower interest rates decrease the opportunity cost of holding zero-yield gold.

Gold gaining tells us that some institutional money came into the market. If we will see this trend in exchange-traded funds (ETFs) is not certain yet, said Philip Newman at consultants Metals Focus.

The yellow metal found further tailwinds from the simultaneous retreat in the dollar index, which made bullion cheaper for overseas buyers.