Saturday, May 27, 2023

Gold rate drops by Rs1,100 per tola in outgoing week

Gold bangles are displayed at a store in this undated file photo. — Reuters
Gold bangles are displayed at a store in this undated file photo. — Reuters

  • Rate of gold (24 carats) reaches Rs236,200 per tola.
  • The international price declines by $6 per ounce. 
  • Silver price has largely remained stable this week. 

The value of gold fluctuated throughout the outgoing week in both the international and domestic markets as traders awaited clarity on the US debt ceiling as well as future interest rate direction from the Federal Reserve.

According to the All Pakistan Sarafa Gems and Jewellers Association (APSGJA), the rate of gold (24 carats) increased by Rs450 per tola and Rs385 per 10 grams to reach Rs236,200 and Rs202,503, respectively.

Cumulatively, the domestic rate dropped by Rs1,100 this week.

Meanwhile, the price of gold declined by $6 in the international market to settle at $1,946 per ounce. 

US Democrats and Republicans are putting the final touches to a last-minute deal to raise the federal debt limit for two years.

If the debt ceiling — which is currently capped at $31.4 trillion — is not raised, it would trigger the first-ever US default.

Besides this, international traders are also expecting the Federal Reserve to hike the interest rate for the 11th consecutive time in June after US inflation clocked in higher than the 2% target. High interest rates negatively affect gold's value.

Separately, the domestic price of gold has remained volatile due to a number of factors, including economic and political turmoil, high inflation, and currency depreciation. People prefer to buy the yellow metal in such times as a safe investment and a hedge.

The jewellers' body also said that local gold was "overcost" by Rs1,300 per tola in Pakistan compared to the Dubai bullion market. This means that, at present, the Pakistani gold market is more expensive than the world market.

Data shared by the association showed the price of silver remained unchanged at Rs2,900 per tola and Rs2,486.28 per 10 grams, respectively.