Gold prices soar as global market rallies

Local rates jump Rs10,000/tola ahead of key US jobs data; rupee inches up

KARACHI:

Gold prices recorded a sharp surge in Pakistan on Wednesday, mirroring gains in the international bullion market, as investors turned to the safe-haven asset amid a weaker US dollar and ahead of the release of key US labour market data.

According to the All-Pakistan Sarafa Gems and Jewellers Association, the price of 24-karat gold jumped Rs10,000 per tola to Rs437,936. Meanwhile, the price of 10-gram gold rose Rs8,573 to Rs375,459, reflecting the strong upward momentum in global bullion prices. The rally in Pakistan followed a rise in international bullion markets, where spot gold edged higher as the US dollar weakened against major currencies. A softer dollar makes gold less expensive for buyers using other currencies, increasing global demand for the precious metal.

Investors are also closely monitoring a series of US employment reports, including the ADP jobs report and the non-farm payrolls data, for signals on the future direction of US monetary policy. US gold futures for December delivery rose 4% to $4,317.40 per ounce, according to Reuters.

Market analysts say weaker-than-expected labour market data could influence expectations about the US Federal Reserve's next interest rate decision. Lower rates generally support gold because the precious metal does not offer interest or dividends, making it more attractive when borrowing costs decline.

In addition to the weaker dollar, easing concerns over global inflation and lower US Treasury yields also provided support to gold prices. Market sentiment has further improved following renewed optimism surrounding diplomatic efforts in the Middle East, reducing pressure on energy prices while encouraging investment in precious metals.

The international market's strength has had an immediate impact on Pakistan's bullion market, where local gold prices are directly linked to global rates and the rupee-dollar exchange rate. Traders noted that increased international buying and currency movements pushed domestic prices to one of the biggest single-day gains in recent months.

Industry experts believe volatility could continue over the coming days as investors await fresh US economic data that may determine the Federal Reserve's policy outlook. Any indication of a slowing US economy or a shift towards lower rates could provide further support to international gold prices, which would likely keep Pakistan's bullion market elevated. In the local currency market, the Pakistani rupee remained broadly stable against major international currencies, according to the latest mark-to-market (M2M) exchange rates released by the State Bank of Pakistan (SBP) for Wednesday. The SBP reported the US dollar's ready rate at Rs277.75 against Rs277.76 a day earlier.