Gold drops to Rs274,500/tola, rupee rises

Gold prices in Pakistan fell by Rs1,700 to Rs274,500 per tola on Monday, continuing a recent trend of declines in line with the international market. On Friday, prices dropped by Rs1,100 to Rs276,200 per tola (11.66 grams), according to the All Pakistan Sarafa Gems and Jewellers Association. In the international market, gold prices fell by $17 to $2,633 per ounce during the same period.

Adnan Agar, Director of Interactive Commodities, explained that recent price fluctuations in the gold market were expected and within normal ranges. He noted that the absence of significant market events has kept movements limited, with upcoming US employment data in November likely to influence market trends. Agar added that with the holiday season starting mid-December, market activity could pick up early in January. Global trends also played a role, with the dollar index gaining 0.5%, marking its best day in over a week. This made greenback-priced bullion more expensive for holders of other currencies. Spot gold ended its four-session winning streak, dropping 1% earlier in the day before settling 0.5% lower at $2,640.93 per ounce. US gold futures also fell 0.6%, closing at $2,663.90.

Meanwhile, the Pakistani rupee posted slight gains, appreciating by 0.03% in the interbank market on Monday to close at 277.97 against the US dollar. This came after a minor loss of 0.10% last week when the currency dipped below 278 for the first time in over 10 weeks. Forex Association of Pakistan Chairman, Malik Bostan, commented on the rupee's recovery, predicting it could stabilise further, potentially around 250. He noted that political unrest on November 24 temporarily impacted the currency but has since rebounded, reflecting growing confidence in the government.

Economic indicators also showed positive trends in November 2024. The trade deficit narrowed by 19% year-on-year (YoY) to $1.6 billion. Exports rose 9% YoY to $2.8 billion, although they declined by 6% month-on-month (MoM). Imports decreased by 3% YoY and 4% MoM to $4.4 billion. Over the first five months of FY25, the trade deficit shrank by 7% YoY to $8.7 billion. Inflation marked a sharp decline, hitting a 79-month low of 4.9% YoY in November 2024, compared to 29.23% in November 2023. This was the lowest inflation rate since April 2018, when it stood at 3.96%. The average inflation rate for 5MFY25 was 7.88%, a significant improvement from 28.62% in the same period last year. The Consumer Price Index (CPI) for November 2024 dropped to 4.9% YoY from 7.2% in October, bringing the 5MFY25 average to 7.9%, a marked improvement from 28.6% in 5MFY24.