Gold price picks up amid volatility; silver steady
Gold prices in Pakistan clawed back on Friday as the precious metal continued to switch trends shuttling between ups and downs mostly because of persistent political and economic turbulence.
Data released by the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA) showed that the price of the bullion increased by Rs700 per tola and Rs600 per 10 grams to settle at Rs186,000 per tola and Rs159,465 per 10 grams, respectively.
The price of gold is Rs3,000 per tola “undercost” in Pakistan, as compared to the Dubai market, showing that the Pakistani gold market was currently cheaper than the global.
It should be noted that Pakistan meets almost all its gold demand through imports, and traders follow its international price in setting rates in the country. Jewellers import the metal against the US dollar and UAE dirham before converting its price into rupees.
Dealers also noted that the majority of the buyers in the local market comprise gold investors these days. Earlier, they were parking their savings in the US dollar to avoid the impact of rupee devaluation at a time of high inflation.
Last week, gold prices remained volatile during the week, with the precious commodity undergoing correction during the first three sessions; however, it regained its shine. The price rose by Rs2,000 during the volatile week that ended on January 14.
Jewellers believe that the investors started moving to the bullion market following the shortfall of the dollar in the open market. In the black market, illegal traders were selling the dollar for Rs290-300 compared to Rs229 in the interbank market.
Meanwhile, silver prices in the domestic market ended flat at Rs2,080 per tola and Rs1,783.26 per 10 grams.
World gold prices scaled their highest levels since late April on Friday and were on track for a fifth consecutive weekly gain amid anticipation of slower rate hikes from the US Federal Reserve and fears of a possible recession.
Spot gold eased 0.1% to $1,928.98 per ounce, by 1148 GMT, after rising to its highest since April 22 last year at $1,937.49 earlier in the session. Prices rose 0.5% this week so far.
Gold tends to gain when rate hike expectations recede because lower rates reduce the opportunity cost of holding non-yielding bullion.