On Wednesday, too, gold was unstoppable as it hit yet another lifetime high, its appeal as a safe haven growing in the face of rupee depreciation and a shortage of dollars.
Gold prices increased by Rs900 per tola and Rs772 per 10 grammes, respectively, according to the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA). These prices now stand at Rs188,600 and Rs161,694 respectively.
Pakistani gold is more expensive than global markets, as evidenced by the price difference compared to the Dubai market.
Due to the rupee’s depreciation against the US dollar during the current cycle and the lack of US dollars, traders predict that the price of gold will reach Rs 200,000 per tola.
According to market analysts, the $6–$8 billion inflow from multilateral and bilateral creditors will pop Pakistan’s gold price bubble.
Meanwhile, the price of silver per tola remained flat at Rs2,150. Likewise, the 10-gram silver price was almost unchanged at Rs1,843.27.
Gold prices extended their New Year rally to jump more than 1% and hit their highest since mid-June on Wednesday, helped by a weaker dollar and growing expectations of less aggressive interest rate hikes at upcoming Federal Reserve meetings.
Spot gold rose 1.2% to $1,862.32 per ounce by 1119 GMT, hitting its highest since June 13. US gold futures also gained 1.2% to $1,868.30.
The dollar index, meanwhile, slipped 0.6%, making gold less expensive for overseas investors. There is some optimism in the market ahead of the release of minutes from the Fed’s December meeting later in the day, Kinesis Money external analyst Carlo Alberto De Casa said.
“Majority of investors are betting on a 0.25% rate hike in the next Fed meeting, differently from a few weeks ago, when another 0.50% rate was given as almost sure.”
Pakistan’s inflation figures for December were released on Monday, with markets now pricing in a chance the central bank might hike interest rates by a full 50-100 basis points on January 23.
Although gold is considered a hedge against higher inflation and a safe store of value in times of uncertainty, higher interest rates raise the opportunity cost of holding non-yielding bullion.
