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Gold glitters again as record high inflation boosts demand

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  • Gold price settles at Rs141,000 per tola.
  • A surge of over 1.43% per tola snapped four-day losing streak of gold.
  • Silver prices plummet by Rs50 per tola.

KARACHI: Gold prices rose on Thursday, as skyrocketing inflation dulled risk appetite and boosted demand for the safe-haven metal, although an advancing Pakistani rupee limited bullion’s gains.

Data released by All Sindh Sarafa Association showed that the gold price in Pakistan surged by Rs2,000 per tola and Rs1,715 per 10 grams to settle at Rs141,000 and Rs120,885.

A surge of over 1.43% per tola snapped the four-day losing streak of the yellow metal during which the price of gold declined by Rs8,100 in the local market.

Record high Pakistan’s consumer price index-bases inflation surged to a multi-decade high of 27.3% in August which pushed the gold price to a one-and-a-half-year-high.

The safe-haven asset reversed its downtrend today as multi-year high inflation data boosted the appeal of the asset; however, the appreciation of the Pakistani rupee was pulling at the heels of the gold market and limiting its upside.

Gold is traditionally seen as an inflation hedge. However, reduced central bank interest rate hikes tend to push government bond yields up, translating into a higher opportunity cost for holding gold that pays no interest.

Gold is considered a hedge against inflation, but interest rate hikes would raise the opportunity cost of holding non-yielding bullion.

In the international market, the price of yellow metal plunged by $13 per ounce to settle at $1,702. Gold prices briefly slid below the key $1,700 psychological level for the first time in six weeks, as major central banks stuck to an aggressive stance to combat inflation, dulling demand for non-yielding bullion.

It should be noted that the gold price stands below cost and is cheaper by Rs3,000 per tola compared to Dubai.

Meanwhile, silver prices in the domestic market plummeted by Rs50 per tola and Rs42.87 per 10 grams to settle at Rs1,470 per tola and Rs1,260.28 per 10 grams today.

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Significant surge in the price of gold in Pakistan

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On Friday, the price of gold in Pakistan continued to increase.

According to the All-Pakistan Gems and Jewellers Sarafa Association, the price of 24-karat gold per tola has risen by Rs2,200, reaching Rs249,000.

The price of 10-gram 24-karat gold increased by Rs1,886, reaching a total of Rs213,477. On Thursday, the cost of 10 grammes of 22-karat gold was Rs195,687.

The global gold market likewise had a rising trajectory. As per APGJSA, the worldwide rate was $2,404 per ounce, showing a decline of $24 during the course of the trading day.

The local market witnessed constant silver prices at Rs2,900 per tola.

Market observers attribute the increase in gold prices to other variables, such as volatility in the global market, currency exchange rates, and economic conditions. The ongoing surge in gold prices is likely to impact investment choices and consumer behaviour in the near future.

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Gold prices in Pakistan have risen by Rs 1,200 per tola.

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The price of one tola of 24 carat gold rose by Rs1,200 and reached Rs246,800 on Thursday, compared to its previous sale price of Rs245,600 on the last trading day.

According to the All Sindh Sarafa Jewellers Association, the cost of 10 grammes of 24 karat gold rose by Rs1,029 to reach Rs211,591, compared to the previous price of Rs210,562. Similarly, the price of 10 grammes of 22 carat gold jumped from Rs193,016 to Rs193,959.

The price of silver remained unchanged at Rs2,900 per tola and Rs2,486.28 per ten grammes.

According to the association, the international market price of gold rose by $10, reaching $2,382 from $2,372.

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The federal government has declared wage and pension increments for its employees.

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The Ministry of Finance has formally declared a rise in the remuneration and retirement benefits of personnel working for the federal government, offering substantial economic alleviation.

According to the notification, personnel in grades 1 to 16 will experience a 25% increment in their salaries, while officials in grades 17 to 22 will be granted a 20% rise. The implementation of this modification will commence on July 1, 2024, and will be applicable to the employees’ fundamental remuneration.

In addition, retired federal government employees would receive a 15% rise in their pension payments. This increase is applicable to retirees from both the civilian and military sectors. It is important to mention that employees who retire on or after July 1, 2024, will also qualify for this pension rise.

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The 15% increase in pension will be computed based on the amount of pension received by retired employees after deductions. Nevertheless, the letter specifies that ad hoc aid will not be factored into the calculations for pension and gratuity.

Moreover, this increment will have no effect on the calculation of housing rent allowances for employees.

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