Gold price in Pakistan fell below Rs200,000 per tola as the rupee continued to recover against the dollar, pushing investors to shift away from the safe-haven metal.
According to All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of gold (24 carats) fell by Rs2,000 per tola and Rs1,715 per 10 grams to settle at Rs198,000 and Rs169,753, respectively.
The substantial decrease in the price of gold came after the rupee recovered by 0.19%, against the US dollar to close at 277.92 in the interbank market.
The price of yellow metal fell Rs8,500 per tola in three trading sessions which was more than the amount it cumulatively gained Rs5,900, or 3.03% per tola during the week ended March 4.
The precious commodity scaled to an all-time high of 210,500 per tola on January 30, 2023; however, the gold price started receding after the rupee recovered on hopes of revival of the $6.5 billion International Monetary Fund (IMF) bailout programme.
It should be noted 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 Rs2,140 per tola and Rs1,834.70 per 10 grams, respectively.
In the international market, gold prices retreated from an earlier 2-1/2 week high as traders awaited US Federal Reserve Chair Jerome Powell’s testimony this week for hints on future rate hikes.
The per-ounce gold price registered a meagre decline of $7 settling at $1,849.
All eyes are on Powell’s testimony to Congress on Tuesday and Wednesday, followed by the February jobs report due on Friday.
“Currently, gold is in a wait-and-see mode,” said UBS analyst Giovanni Staunovo. “There’s unlikely to be a change of script from Powell, reiterating the need for further rate hikes to bring inflation under control.”
Although gold is considered a hedge against inflation, rising interest rates tend to decrease the appetite for zero-yield bullion.