Gold crosses Rs551,500/tola on economic, geopolitical uncertainty

Jumps by Rs21,100; global bullion tops $5,300 on investor anxiety over Fed independence

KARACHI:

Gold prices in Pakistan surged to an all-time high on Wednesday, crossing Rs551,500 per tola, following a sharp rally in global bullion markets where gold topped $5,300 per ounce for the first time. The surge was driven by economic uncertainty, a weakening US dollar, and investor concerns over the independence of the Federal Reserve ahead of its policy announcement.

In the local market, gold per tola jumped Rs21,100 to Rs551,662, according to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA). Likewise, 10-gram gold rose by Rs18,090 to Rs472,961. The rally came after Tuesday's session, when gold per tola had declined by Rs1,500 to Rs530,562.

Silver also touched a new record, with prices per tola rising Rs271 to Rs11,911, marking an all-time high in the domestic market.

Internationally, gold hit a record $5,311.31 per ounce, with spot prices trading 1.7% higher at $5,278.28 per ounce by 1605 GMT, after gains of more than 3% in the previous session, according to Reuters. Investors flocked to safe-haven assets amid mounting macroeconomic and geopolitical risks.

Market participants remained cautious ahead of the US Federal Reserve's policy decision, due at 2 pm ET, as uncertainty grows over the Fed's independence and the future trajectory of US monetary policy. Adnan Agar, Director at Interactive Commodities, said gold had entered a new price-discovery phase. "Gold hit a high of $5,311 and was later trading around $5,275. The opening was near $5,156, effectively marking the day's low. This indicates strong upward momentum," he said.

Agar added that the FOMC decision and press conference would be crucial for the market. "Interest rates are expected to remain unchanged, but forward guidance will shape the next trend. The current Fed chairman's term is ending, and a new chairman, likely close to Donald Trump, is expected to push for aggressive rate cuts, which could further weaken US monetary policy and support gold," he noted.

Commenting on silver, Agar said trading in silver contracts on the Pakistan Mercantile Exchange (PMEX) would remain suspended due to extreme volatility. "Silver is moving $8-12 per day, a 10-15% fluctuation. For a small market like ours, this risk is significant," he explained.

Global exchanges such as the Shanghai Metal Exchange and Chicago Mercantile Exchange have already restricted positions or raised margin requirements for silver. PMEX has halted trading to protect investors, with contracts expected to resume only after prices stabilise.

Analysts said the gold market's overall bias remains bullish, supported by central bank demand, buying on dips, geopolitical tensions, and currency weakness, despite technically overbought conditions.

Meanwhile, the Pakistani rupee edged up to 279.81 against the US dollar in the inter-bank market, gaining Rs0.01 from Tuesday's close at 279.82.