Gold hits Rs410,278/tola amid global rally

Precious metal at new peak as dollar weakens, US shutdown looms; SBP raises Rs2.13tr

KARACHI:

Gold prices in Pakistan surged to fresh record highs on Wednesday, tracking the global rally driven by a weaker dollar, safe-haven demand, expectations of a US rate cut following softer jobs data and a looming government shutdown.

According to the All Pakistan Sarafa Gems and Jewellers Association (APSGJA), the local price of gold rose by Rs3,500 per tola to reach Rs410,278, while the 10-gram rate climbed by Rs3,001 to settle at Rs351,747.

On Tuesday, the yellow metal had already posted a sharp rise, with per-tola price touching Rs406,778 after a gain of Rs3,178.

In the international market, spot gold traded within a volatile range as investors weighed uncertainty over the US government's budget deadlock. Interactive Commodities Director Adnan Agar said gold touched a high of $3,895, a low of $3,853, and was last hovering around $3,864.

"The market has gone so high that it's now taking a breather," Agar said, noting that gold's rally appears exhausted in the short term. "If the US government shutdown continues and jobs data is delayed, safe-haven demand may sustain prices. But if Washington resolves the impasse soon, gold could see a correction, because it needs an economic reason to adjust downwards."

Spot gold was up 0.2% at $3,864.16 an ounce at 11:20 am ET (1520 GMT) after touching a record peak of $3,895.09, according to Reuters. US gold futures for December delivery gained 0.5% to $3,891.10.

Meanwhile, the Pakistani rupee inched up against the US dollar in the inter-bank market on Wednesday. By the day's close, the currency stood at 281.31 against the greenback, marking an improvement of one paisa from Tuesday's close at 281.32.

The dollar weakened against a basket of other leading currencies, making dollar-priced gold more affordable for overseas buyers.

Moreover, the State Bank of Pakistan (SBP) on Wednesday raised a total of Rs2.13 trillion through the auction of Pakistan Investment Bonds – Floating Rate (PFL) and Market Treasury Bills (MTBs).

According to the central bank's Domestic Markets & Monetary Management Department, the auction of 10-year floating-rate PIBs (semi-annual) attracted bids worth Rs394 billion. Out of these, the SBP accepted Rs244 billion in competitive bids at a cut-off price of 94.5465, along with Rs2.75 billion in non-competitive bids. The total accepted amount stood at Rs246.75 billion.

Separately, the SBP sold MTBs worth Rs1.88 trillion, including both competitive and non-competitive bids, across different maturities. Data breakdown shows that Rs310.2 billion was raised through one-month bills at a cut-off yield of 11.15%, Rs43.5 billion in three-month bills at 11.05%, Rs66.8 billion in six-month bills at 11.05%, and Rs220.9 billion in 12-month bills at 11.19%.

The latest auction results indicate that yields have remained largely stable around the 11% mark, reflecting steady market expectations on the interest rate outlook. The government continues to rely heavily on short-term borrowing while maintaining demand for longer tenor floating-rate PIBs.