Karachi: On Monday, the gold price fell below Rs200,000 per tola as the Pakistani rupee strengthened against the dollar for the third consecutive session, prompting investors to abandon the yellow metal.
Monday’s data from the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA) indicated that the price of gold (24 carats) fell by Rs2,000 per tola and Rs1,715 per 10 grammes, settling at Rs198,000 and Rs169,753, respectively.
After the rupee recovered by 0.19% against the US dollar to close at 277.92 on the interbank market, the price of gold fell significantly.
In three trading sessions, the price of yellow metal fell Rs8,500 per tola, which was greater than the cumulative gain of Rs5,900, or 3.03% per tola during the week ending March 4.
The precious commodity reached an all-time high of 210,500 per tola on January 30, 2023; however, the gold price began falling after the rupee recovered in anticipation of the International Monetary Fund’s (IMF) $6.5 billion bailout program’s revival.
Notably, almost all of Pakistan’s gold demand is met through imports, and traders in the country set prices based on the international price. Prior to converting its price into rupees, jewellers import the metal against the U.S. dollar and UAE dirham.
On the domestic market, silver prices were unchanged at Rs2,140 per tola and Rs1,834.70 per 10 grammes, respectively.
On the international market, gold prices retreated from a two-and-a-half week high as traders awaited this week’s testimony by US Federal Reserve Chair Jerome Powell for hints on future rate hikes.
The price of gold per ounce decreased modestly by $7, settling at $1,849.
On Tuesday and Wednesday, all eyes will be on Powell’s testimony before Congress, followed by the February employment report due on Friday.
“Gold is currently in a wait-and-see mode,” said Giovanni Staunovo, an analyst at UBS. Powell is unlikely to deviate from his script, reiterating the need for additional rate hikes to bring inflation under control.
Although gold is regarded as a hedge against inflation, rising interest rates tend to reduce demand for zero-yield bullion.
