Gold prices in Pakistan surged beyond the 0.2 million mark on Tuesday, as the rupee remained stuck in reverse gear amid economic concerns about depleted foreign reserves and a dogged loan arrangement with the lender of last resort.
According to data supplied by the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of gold (24 carats) increased by Rs2,300 per tola and Rs1,972 per 10 kilos to Rs201,500 and Rs172,754, respectively.
According to the State Bank of Pakistan, the rupee depreciated 0.24% versus the US dollar in the interbank market on Tuesday, finishing at 282.29, a drop of Re0.68 (SBP).
Recent developments demonstrate that gold continues to be a safe haven asset, since it may profit from the uncertanity.
The yellow gold has lost Rs1,300 per tola in the previous week, and it has only posted gains twice as the Pakistani rupee remains unpredictable.
The International Monetary Fund (IMF) was "happy” with Pakistan’s initiatives, according to Finance Minister Ishaq Dar last week, but the staff-level agreement could not be signed this week.
"We appear to be quite near to finalising the staff-level agreement, perhaps in the next few days,” Dar remarked during a seminar lecture.
But, citing his experience of completing 12 reviews of Pakistan’s "one and only” IMF programme, the finance minister stated that "it has taken longer than it should have” for Islamabad to finish the current ninth review.
However, worldwide gold prices fell from a more than five-week high but remained just over the critical $1,900 mark as hopes mounted that the US Federal Reserve will reduce rate rises following the failure of two major regional banks.
As of 0524 GMT, spot gold was down 0.6% at $1,901.91 per ounce, after climbing more than 2% on Monday to its highest since February 3.
Gold futures in the United States declined 0.5% to $1,907.30. "As the risk environment seeks to stabilise, any less-hawkish rate bets will likely have to seek confirmation from the impending US CPI announcement, which may cause some profit-taking into today’s session,” said IG market analyst Yeap Jun Rong.
US officials have announced several measures to limit the fallout from the now-shuttered Silicon Valley Bank, the largest bank failure since the 2008 financial crisis, and restore investor confidence in the banking system. Regulators closed New York-based Signature Bank on Sunday.
Markets are now pricing in a 69.6% possibility of a 25 basis-point rate rise at the Federal Reserve’s policy meeting next week. In a low-interest-rate climate, zero-yield gold becomes a more appealing option as a hedge against economic risks.
"The near (term) prognosis for gold appears good,” ANZ analysts wrote in a report, adding that the commodity has risen above its 50-day moving average, indicating a shift in momentum. "With relatively limited investor allocation, we expect this to continue,” they stated.
The US consumer price index (CPI) report, which is scheduled at 1230 GMT, will be keenly scrutinised for clues about the Fed’s rate-hike strategy.
“Should the data deliver another upside surprise, the Fed could be more hand-tied in its policy decision, which could see market expectations reverting to a hawkish recalibration,” IG’s Yeap said.
