Karachi, May 17, 2024 – Gold prices in Pakistan witnessed a notable decline on Friday, following a similar downward trend in international markets.
The price of gold (24-karat) per tola fell by Rs 600, settling at Rs 245,000 compared to the previous day’s closing of Rs 245,600 in local markets. Likewise, the price of gold (24-karat) per 10 grams dropped by Rs 514, closing at Rs 210,048 from the previous day’s Rs 210,562.
Analysts at the bullion market pointed to the dip in international gold prices as the primary reason for the decrease in domestic rates. On the global stage, gold prices slipped by $6, ending at $2,384 per ounce from the last day’s closing of $2,390.
This decline in gold prices is largely attributed to multiple factors affecting the international markets. Among these, a strengthening US dollar and rising bond yields have played significant roles. As gold is typically priced in US dollars, a stronger dollar makes gold more expensive for buyers using other currencies, thereby reducing demand. Furthermore, higher bond yields offer more attractive returns to investors compared to gold, which does not yield interest.
Additionally, recent economic data from major economies has suggested a more resilient economic recovery, particularly in the United States. This has led to increased speculation about potential interest rate hikes by the Federal Reserve, which generally weighs negatively on gold prices. Higher interest rates increase the opportunity cost of holding non-yielding assets like gold.
Domestic factors in Pakistan have also influenced the gold prices. The Pakistani rupee has shown signs of recovery against the US dollar, contributing to the lower gold prices in local markets. A stronger rupee makes imports cheaper, including gold, which is heavily imported.
Local jewelers have reported a mixed reaction from buyers. While some see this as an opportune moment to purchase gold, others remain cautious, speculating on further declines. “We have seen a slight uptick in buying activity, but many customers are waiting to see if prices drop further,” said Muhammad Ali, a gold trader in Karachi.
Despite the current slide, gold remains a popular investment choice in Pakistan, often seen as a hedge against inflation and economic uncertainty. However, the market’s short-term outlook appears bearish, aligned with the global sentiment.
Overall, while the drop in gold prices has brought some relief to potential buyers, it underscores the interconnectedness of local markets with global economic trends. Analysts suggest keeping an eye on international developments, particularly actions by the US Federal Reserve and currency fluctuations, which are likely to influence future price movements.