Gold extends gains in line with international market

• Gold price rise by Rs50 per tola and Rs43 per 10 grams to settle at Rs124,500 and Rs106,739.
• The precious commodity is recording gains on the back of the constant depreciation of the Pakistani rupee.
• In the international market, gold records a slight increase of $3 per ounce to settle at $1,787.

KARACHI: In line with the international market, the gold price in Pakistan extended gains on Monday as the Pakistani rupee continued to slide against the US dollar, dropping to an all-time low of Rs177.89.

The price of precious commodity rose by Rs50 per tola and Rs43 per 10 grams to settle at Rs124,500 and Rs106,739, respectively.

Cumulatively, the safe-haven asset had gained Rs1,050 or 0.85% per tola during the week ended December 11.

Earlier, speaking to Geo.tv, a gold dealer had said that due to lack of purchasing power, there is no demand in the local market.

He had said that the price of gold in the local market is currently being determined keeping in view the rupee-dollar parity.

In the international market, gold recorded a slight increase of $3 per ounce to settle at $1,787 as the market focus pivoted to this week's Federal Reserve meeting to learn how quickly it plans to unwind economic support measures introduced in response to the coronavirus pandemic.

"In the short- to medium-term, gold's not going to be going anywhere until we get an idea of how much the Fed accelerates tapering and whether or not they are particularly hawkish in their statement, which could help yields and pressure gold," said Michael Hewson, chief market analyst at CMC Markets UK.

Although gold is considered an inflation hedge, reduced stimulus and interest rate increases tend to push government bond yields up, raising the opportunity cost of bullion, which pays no interest.

However, with the market pricing in the Fed moving forward into a rate rise cycle, it is sufficient for gold to be counted as a defensive asset right now, said Stephen Innes, managing partner at SPI Asset Management.

"And that's why it's continuing to hold the bid," he said.

Meanwhile, silver prices in the domestic market remained unchanged at Rs1,460 per tola and Rs1,251.71 per 10 grams.