Gold recorded its first major drop of Rs3,350 per tola (11.66 gram) to Rs177,300 in Pakistan, breaking an almost two-week-long streak of crazy gains almost every day despite the rupee’s maintained downtick on Friday.
The local currency slid by a fresh 0.09% (or Rs0.21) to an 11-week low at Rs225.65 against the US dollar in the interbank market, according to State Bank of Pakistan (SBP) data.
A drop in the rupee usually agrees with the gold pricing committee to revise the metal price as well, as the country meets the demand for the precious metal through imports in the US dollar denomination.
However, a drop in the commodity price in the international market by $18 per ounce (31.10 grams) to $1,797 was agreed on by the pricing committee to revise down the commodity price in Pakistan as well.
Pakistan has seen days in recent weeks when the bullion recorded a reduction in its price in international markets, but local pricing bodies (the All-Pakistan Sarafa Gem and Jewellers Association / APSGJA) kept ballooning the commodity price in the country amid high demand and low supply scenario for the metal.
The association President, Haji Haroon Chand said, “The other day the price has gone too high in Pakistan and there is the realisation that it should come down to make it affordable (for genuine buyers).”
The price of gold had jumped up by almost 10% (or net Rs16,100) per tola in the past three weeks (since December 1, 2022).
The rupee has posted a fresh loss after the country’s foreign exchange reserves dropped to almost a nine-year low at $6.11 billion and the global rating agency S&P downgraded Pakistan’s credit rating on Thursday.
A local research house said the rupee is expected to lose to Rs250 against the greenback by June 30, 2022, and to Rs263 by December 31, 2022.
Published in The Express Tribune, December 24th, 2022.
Gold Snaps Two-Week Rising Streak
Gold prices have fallen after nearly two weeks of consecutive increases, putting an end to what many have described as the precious metal’s “winning streak.”
On Friday, gold prices ended the day at $1,305.50 an ounce, down 0.2% compared to the previous day. This ended the precious metal’s recent spell of positive returns since the price had had been climbing steadily since February 14.
The decline on Friday was largely attributed to a recent rally in the U.S. dollar, which increased the pressure on gold prices. Additionally, ongoing turmoil in the banks of Germany is thought to have been a contributing factor.
Analysts were quick to point out that Friday’s decline does not spell the end of gold’s recent upward trajectory. Warren Downey, chief investment officer at Compound Capital, commented: “The gold market has been consolidating in a tight range and the recent dip isn’t overly concerning. We expect prices to recover soon as the markets digest the news and U.S. bond yields settle down.”
Indeed, many experts remain bullish on gold due to the uncertain geopolitical environment and rising inflation expectations. Both of these factors are generally seen as positive drivers for gold prices.
Whether or not gold is able to resume its rise remains to be seen. But for now, the precious metal appears to have taken a breather after two weeks of strong gains.
