Gold extends shining streak in Pakistan

• Gold resumes stellar run on safe-haven appeal.
  
• Silver prices fall Rs30 per tola to Rs2,070.
• Dealers see gold touching Rs200,000 per tola.

Gold prices Saturday increased by Rs1,600 to Rs185,300 per tola as investors basked in the safe-haven glory of the precious metal with local currency remaining weak against the US dollar that seems to have disappeared from the regulated market.

On Friday, the gold bounced back from a black-swan stumble that was mainly an upshot of a speculation-driven shift in trend.

Data released by All-Pakistan Sarafa Gems and Jewellers Association (APSGJA) showed that the price of 10-gram gold also rose by Rs1,372 to settle at Rs158,865.

Analysts said the bullion bucked the trend after reports Pakistan was likely to receive foreign funding from friendly countries as dollar inflows usually strengthen local currencies against the dominant US greenback.

Earlier in the week, Minister for Finance and Revenue Senator Ishaq Dar said despite an uphill task, the country would meet its international obligations and not default.

Dar also sees Saudi Arabia and China beefing up their deposits in Pakistan "within a matter of days" and claimed that the forex reserves would see a rise gradually during the ongoing fiscal year.

The analysts mentioned 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 Rs250-260 compared to Rs227 in the interbank market.

Meanwhile, dealers fear the price of the yellow metal may rise to Rs200,000 per tola due to the rupee devaluation against the US dollar.

However, they also believe that an inflow of $6-8 billion from multilateral and bilateral creditors will burst the pricing bubble in Pakistan.

Rates of silver in the local markets decreased by Rs30 per tola to Rs2,070, while the price of 10-gram silver slipped Rs25.71 to Rs1,774.71.

Gold prices shot up over 1% on Friday to seven-month highs as Treasury yields and the dollar fell after US economic data cemented expectations of a less-hawkish Fed, setting the metal on track for its third consecutive weekly rise.

Spot gold jumped 1.9% to $1,867.18 per ounce by 1:43 p.m. ET (1843 GMT), their highest since June 13 last year. Prices have gained about 2.1% so far this week, the most since the week of December 2, 2022.

Boosting gold, the dollar index was down 1%, while benchmark Treasury yields were close to their lowest in nearly two weeks.

Higher interest rates dim bullion's appeal as an inflation hedge and raise the opportunity cost of holding the non-yielding asset.

Pakistan’s inflation figures for December were released on Monday, with markets now pricing in a chance the central bank might hike interest rates by a full 50-100 basis points on January 23.

Although gold is considered a hedge against higher inflation and a safe haven of value in times of uncertainty, higher interest rates raise the opportunity cost of holding non-yielding bullion.