The price of gold soared to a new historical high of Rs247,600 per tola (11.66 grams) in Pakistan, aligning with global trends. This surge occurred as the domestic currency remained relatively stable, hovering near a one-week low at Rs277.94 against the US dollar in the interbank market ahead of the Eid holidays.
Gold has continued its record-breaking streak for the third consecutive working day on Tuesday. With a fresh increase of Rs1,900 per tola on the day, it has cumulatively surged by Rs7,400 per tola over the past three working days, reaching Rs247,600.
The precious metal has maintained this momentum following a powerful rally in the international market, reaching $2,374 per ounce (31.10 grams) on the day. This marks a cumulative rise of $68 over the past three days, according to the All Pakistan Sarafa Gems and Jewellers Association.
Market discussions suggest that the rise in gold prices is linked to better-than-expected job data in the US. Factories have employed a higher number of people than expected, while the unemployment rate remains low in the West. This development may prompt the US central bank, the Fed, to leave the interest rate unchanged at the near-record high level of 5-5.25% in June, contrary to recent expectations for a 25 basis points cut. This could lead investors to seek refuge in the safe haven of gold.
Bullion expert Adnan Agar remarked the other day that gold has skyrocketed by a notable $400 over the past four weeks, suggesting that the “gold bubble” is destined to burst sooner or later. He anticipates a downward trend in Pakistan as well.
According to the State Bank of Pakistan (SBP), the domestic currency ticked up by Rs0.01, closing near yesterday’s one-week low at Rs277.94 against the greenback.
The currency has remained largely stable after nearing its immediate saturation level of Rs277/$, with demand and supply of the US dollar believed to be in balance in the market. It reached a five-and-a-half-month high at Rs277.03/$ last week.
Cumulatively, the currency has gained 10.5% or over Rs29 over the past seven weeks compared to its record low closing at Rs307.10/$ in the first week of September 2023. In the open market, however, the currency increased further by Rs0.21 on a day-to-day basis, closing at Rs279.37/$, according to the Exchange Companies Association of Pakistan (ECAP).
Published in The Express Tribune, April 10th, 2024.
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