Price of gold increases by Rs3,500 per tola to Rs205,000
Gold price in Pakistan rebounded Wednesday to resume its stellar run after record-high January inflation spurred a fresh rush towards the safe-haven asset, as the precious metal is the investment of choice during economic uncertainty.
Data released by the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA) showed that the price of gold (24 carats) increased by Rs3,500 per tola and Rs3,000 per 10 grams to settle at Rs205,000 and Rs175,754, respectively.
On Tuesday, gold price registered its highest single-day drop as the rupee slightly recovered against the US dollar and investors also kept a close watch on the US Federal Reserve's interest rate hike decision and policy outlook.
The surge in the gold rate comes as the demand increased after the investors moved towards the yellow metal as Pakistan’s headline inflation accelerated to a record high level in January amid food supply constraints and a significant surge in the price of petroleum products.
Consumer prices rose 27.6% compared to 13% in the same month of last year, according to data released by the Pakistan Bureau of Statistics (PBS) on Wednesday. This is the highest year-on-year inflation after May 1975 when the median rate clocked in at 27.77%.
Investors were, however, purchasing only gold bars, not jewellery, which had not only reduced goldsmiths' profit margins but the labour force was also at the stake of losing jobs, as jewellery makers were moving towards other professions in absence of work.
International gold prices ticked lower today as investors kept to the sidelines ahead of the US Federal Reserve’s policy decision on its interest rate path due later in the day.
Spot gold increased $27 to $1,929 per ounce as of 0929 GMT, after falling to its lowest since January 19 in the previous session. US gold futures fell 0.3% to $1,939.70.
“It’s pretty certain that the Fed is going to hike rates by 25 basis points,” said Michael Hewson, chief market analyst at CMC Markets.
But “the risk is very much towards the downside for gold, because Powell needs to slightly reset market expectations about what’s likely to come afterwards”, he added.
Meanwhile, silver prices in the domestic market remained stable and settled at Rs2,250 per tola and Rs1,929 per 10 grams, respectively.
— Additional input from Reuters