Tuesday saw the worst one-day decline in gold prices in Pakistan as the rupee marginally strengthened against the US dollar as investors closely followed the US Federal Reserve’s decision to raise interest rates and its outlook for policy.
The price of gold (24 carats) fell by Rs9,000 per tola and Rs7,716 per 10 grammes to settle at Rs201,500 and Rs172,754, respectively, according to data issued by the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA).
The jewellers’ organisation also claimed that local gold in Pakistan was “overpriced” by Rs2,500 per tola when compared to the bullion market in Dubai.
The price of gold has fallen as demand has decreased as investors appear to have abandoned the safe-haven commodity in favour of the dollar, which is now freely tradeable following the lifting of the dollar cap.
As a result of the developments surrounding the talks with the International Monetary Fund (IMF), the Pakistani rupee began to show signs of recovery today, rising by about 2 rupees to settle at 267.89.
However, investors were only buying gold bars, not jewellery, which had lowered goldsmiths’ profit margins and put the labour force at risk of losing jobs as jewellery manufacturers turned to other careers in the lack of work.
On the international market, spot gold fell $22 to $1,902 per ounce, its lowest price since January 19. But bullion has increased 4.3% so far in January, putting it on track to increase for a third consecutive month.
“Gold prices are feeling the squeeze caused by a strengthening dollar as a build-up of expectations, ahead of this Wednesday’s Fed rate decision and policy statement,” said ActivTrades senior analyst Ricardo Evangelista.
Meanwhile, silver prices in the domestic market decreased by Rs50 per tola and Rs42.88 per 10 grams to settle at Rs2,250 and Rs1,929, respectively.
