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Gold price falls on rupee’s recovery

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  • Gold rate slips under Rs200,000 per tola.
  • Price of gold decline by Rs8,500 in three trading sessions.
  • Silver prices remain unchanged at Rs2,140 per tola.

Gold rate slipped under Rs200,000 per tola on Monday as the Pakistan rupee continued to recover against the dollar for the third straight session, prompting investors to shift away from the yellow metal.

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, data from the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA) showed Monday. 

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.

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The gold price in Pakistan today

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According to the All Sindh Sarafa Jewellers Association, the price of 10 grammes of 24 karat gold increased by Rs772 to Rs184,928 from Rs184,156, while the price of 10 grammes of 22 carat gold increased to Rs169,517 from Rs168,810.

These oscillations are strongly correlated with shifts in the US dollar’s value, demonstrating the complex interplay between gold prices and exchange rates.

This emphasises how local gold prices are impacted by events related to the global economy.

On the other hand, the cost of 24-karat silver was constant at Rs 2,570. Globally, too, the price of gold increased somewhat by $9 to $2,057 per ounce.

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Pakistan receives a $2 billion loan from China, according to the finance minister

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The $2 billion loan was one year ahead of schedule and became due in March. According to reports, Beijing had informed Islamabad of the decision.

The International Monetary Fund granted Pakistan’s cash-strapped economy a $3 billion standby arrangement last summer, but the country is still battling to recover from the financial crisis.

According to ratings firm Fitch, one of the top concerns confronting the next administration would be obtaining funding from bilateral and multilateral partners due to Pakistan’s precarious foreign situation, as was stated last week.

This event occurs one month after Anwaar-ul-Haq Kakar, the acting prime minister, asked for a $2 billion loan to be rolled over for a year in a letter to his Chinese counterpart.

In his letter, Kakar also expressed gratitude for China’s efforts to lessen Pakistan’s load

of foreign payments.

It is to be noted that Pakistan acquired safe deposits of $4 billion from China to address the balance of payments issue.

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“Ready to work with Pakistan’s new government,” the IMF said.

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In response to the former premier’s request, IMF Director of Communications Julie Kozak stated, “I’m not going to comment on ongoing political developments,” during a news conference.

She continued by saying that they “look forward to working on policies to ensure macroeconomic stability and prosperity for all of Pakistan’s citizens with the new government.”

In addition to stating that the plan is “supporting the authority’s efforts to stabilise the economy and to, of course, with a strong focus on protecting the most vulnerable,” Kozack said the lender increased the total disbursements under the Standby Arrangement (SBA) to $1.9 billion.

This has been accomplished by closely adhering to budgetary constraints and safeguarding the social safety net. In order to keep foreign exchange reserves growing and rein in inflation, a strict monetary policy stance has been maintained, the speaker stated.

The PTI founding chairman decided to write a letter to the international lender, asking it to demand an audit of the election held on February 8 before it proceeds with discussions with Islamabad for a new loan programme. This move prompted the IMF to release its statement.

In response to the former premier’s request, IMF Director of Communications Julie Kozak stated, “I’m not going to comment on ongoing political developments,” during a news conference.

She continued by saying that they “look forward to working on policies to ensure macroeconomic stability and prosperity for all of Pakistan’s citizens with the new government.”

In addition to stating that the plan is “supporting the authority’s efforts to stabilise the economy and to, of course, with a strong focus on protecting the most vulnerable,” Kozack said the lender increased the total disbursements under the Standby Arrangement (SBA) to $1.9 billion.

This has been accomplished by closely adhering to budgetary constraints and safeguarding the social safety net. In order to keep foreign exchange reserves growing and rein in inflation, a strict monetary policy stance has been maintained, the speaker stated.

The PTI founding chairman decided to write a letter to the international lender, asking it to demand an audit of the election held on February 8 before it proceeds with discussions with Islamabad for a new loan programme. This move prompted the IMF to release its statement.

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