Wednesday Dec 08, 2021
KARACHI: Gold prices in Pakistan recorded an increase of Rs300 per tola on Wednesday, propped up by a softer rupee and concerns regarding economic uncertainty.
Gold was up by Rs300 at Rs124,300 per tola and increased by Rs257 to Rs106,567 per 10 grams. The rates of gold were Rs124,000 per tola and Rs106,310 per 10 grams on Tuesday.
Analysts believe that investors are afraid of inflation going out of control and are, therefore, buying gold to hedge against that risk.
However, local dealers highlight that domestic demand for the yellow metal is flat in the domestic market.
It is pertinent to mention here 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.
Meanwhile, silver prices in the domestic market remained unchanged at Rs1,460 per tola and Rs1,251.71 per 10 grams.
In the international market, gold prices hit a one-week high as the dollar and US Treasury yields slipped, with bullion's safe-haven appeal also buoyed by tensions surrounding Ukraine, in the run-up to US consumer prices data later in the week.
Spot gold was up 0.4% to $1,791.40 per ounce, while US gold futures rose 0.5% to $1,793.20 per ounce.
Boosting bullion's appeal, benchmark US Treasury yields and the dollar index retreated. A softer US dollar decreases bullion's cost for overseas buyers.
While overall markets are more optimistic amid fading worries over the Omicron coronavirus variant, resulting in a rise in risk-related assets, gold has joined the bandwagon mostly because of its inverted correlation with treasury yields and the dollar, said Ricardo Evangelista, senior analyst at ActivTrades.
But gold's upside may be limited, and it was not likely to move above the $1,810 level, especially with the narrative shifting back to central banks' tightening policy, which was likely to drive further US dollar gains, added Evangelista.