Gold prices rise Rs3,900/tola despite global dip

International market declines on stronger US jobs data; rupee inches up

KARACHI:

Gold prices in Pakistan moved higher on Friday, even as the precious metal declined in the international market following stronger-than-expected US employment data that raised expectations of an earlier rate hike by the Federal Reserve.

According to rates shared by the All-Pakistan Gems and Jewellers Sarafa Association, the price of gold increased by Rs3,900 per tola to reach Rs469,136. The price of 10-gram gold rose by Rs3,344, settling at Rs402,208. The latest increase came a day after gold prices had surged Rs11,200 per tola, taking the price to Rs465,236 on Thursday.

Globally, spot gold fell 1.1% to $4,422.91 per ounce by 10:50 am EDT (1447 GMT) on Friday and was on track for a weekly decline, as per Reuters. Following the release of the US jobs data, bullion had fallen more than 2% to the intra-day low of $4,364.99 per ounce.

The stronger US labour market data reinforced expectations that the Federal Reserve could raise rates as soon as this month. Higher interest rates generally weigh on gold because the non-yielding asset becomes less attractive compared with interest-bearing investments.

Despite the short-term pressure, market participants continue to see strong underlying demand for gold, particularly among large institutional investors.

Interactive Commodities Director Adnan Agar highlighted growing buying interest from major investment and asset-management institutions following the recent correction in gold prices.

He cited a Bloomberg report, referenced in a post by market analyst Tracy Shuchart, according to which major asset managers including Fidelity International, Pictet Asset Management and Robeco had been increasing their gold holdings after the recent decline in prices.

Agar said Amundi, described as Europe's largest asset manager, was also buying gold on expectations that prices could reach $5,000 per ounce by the end of the year. The institutional buying reflects a "buying-the-dip" strategy, with investors using the recent correction from record highs to accumulate the precious metal at comparatively lower prices.

According to the market analysis cited by Agar, gold prices have remained below their earlier highs, while holdings of gold-backed exchange-traded funds (ETFs) have shown renewed strength in recent weeks. The divergence suggests that some institutional investors may be using the price correction to rebuild exposure to bullion.

The renewed accumulation could provide support to gold prices over the medium to long term, even if tighter US monetary policy creates volatility in the short term.

Domestic silver prices also increased on Friday. The price of silver rose by Rs117 per tola to reach Rs7,161.

Meanwhile, the Pakistani rupee closed the day at 277.41, a gain of Rs0.01 against the greenback from Thursday's settlement at 277.42/$. Moreover, the Japanese yen was on track for its strongest week in more than a month.