Gold extended its downward spiral on Tuesday for the fourth consecutive session as the Pakistan rupee continues to strengthen against the US dollar in both — interbank and open markets — fading the shine of the yellow metal.
The price of gold (24 carats) fell by Rs700 per tola and Rs600 per 10 grams to settle at Rs197,300 and Rs169,153, respectively, according to All-Pakistan Sarafa Gems and Jewellers Association (APSGJA).
The price of yellow metal fell Rs9,200 per tola in four trading sessions which was more than the amount it cumulatively gained Rs5,900, or 3.03% per tola during the week ended March 4.
The price of gold is declining due to the strengthening of the rupee which settled at 277.87 against the US dollar in the interbank market today after a meagre increase of 0.02% compared to Monday’s close of 277.92.
The precious commodity scaled to an all-time high of 210,500 per tola on January 30, 2023; however, the gold price started receding after the rupee recovered on hopes of revival of the $6.5 billion International Monetary Fund (IMF) bailout programme.
It should be noted that Pakistan meets almost all its gold demand through imports, and traders follow its international price in setting rates in the country. Jewellers import the metal against the US dollar and UAE dirham before converting its price into rupees.
Meanwhile, silver prices in the domestic market remained unchanged at Rs2,140 per tola and Rs1,834.70 per 10 grams, respectively.
In the international market, the gold prices eased, as investors awaited Federal Reserve Chair Jerome Powell’s testimony later in the day for clues on the future path of US interest rate hikes. The price of per ounce gold settled at $1,842 after a decline of $7.
Prices have eased from a more than two-week peak of $1,858.19 hit on Monday but remained hemmed in a narrow range.
The dollar index gained 0.1%, making bullion less affordable for overseas buyers.
Powell is due to deliver his semi-annual testimony before Congress on Tuesday and Wednesday. The US jobs report for February is due on Friday.
Gold’s quest to extend gains is set to be heavily influenced this week by potential policy clues from Powell’s testimonies and the incoming US payrolls report, said Han Tan, chief market analyst at Exinity.
If Friday’s jobs data shows significant resilience in the US labour market, it would pave the way for even higher US rates and could unwind the month-to-date gains garnered so far by gold, Tan added.
Despite being known as an inflation hedge, higher interest rates dent bullion’s appeal as they increase the opportunity cost of holding a zero-yield asset.
In the international exchange market, the US dollar has continued to weaken in relation to the Pakistani rupee.
The dollar fell to Rs278.10 from Rs278.17 at the beginning of interbank trading, according to currency dealers, a seven paisa loss.
In the meantime, there was a lot of turbulence in the stock market, but it recovered and moved into the positive zone. The KSE-100 index recovered momentum and reached 116,000 points after soaring 1,300 points.
Both currency and stock market swings, according to analysts, are a reflection of ongoing market adjustments and economic uncertainty.
The cornerstone of economic cooperation between the two brothers and all-weather friends is still the China-Pakistan Economic Corridor, the initiative’s flagship project.
In contrast to reports of a slowdown, recent events indicate a renewed vigour and strategic emphasis on pushing the second phase of CPEC, known as CPEC Phase-2, according to the Ministry of Planning, Development, and Special Initiatives.
According to the statement, this crucial stage seeks to reshape the foundation of bilateral ties via increased cooperation, cutting-edge technology transfer, and revolutionary socioeconomic initiatives.
Planning Minister Ahsan Iqbal is leading Pakistan’s participation in a number of high-profile gatherings in China, such as the 3rd Forum on China-Indian Ocean Region Development Cooperation in Kunming and the High-Level Seminar on CPEC-2 in Beijing.
His involvement demonstrates Pakistan’s commitment to reviving CPEC, resolving outstanding concerns, and developing a strong phase-2 roadmap that considers both countries’ long-term prosperity.
At the core of these interactions is China’s steadfast determination to turn CPEC into a strategic alliance that promotes development, progress, and connectivity.
Instead of being marginalised, CPEC is developing into a multifaceted framework with five main thematic corridors: the Opening-Up/Regional Connectivity Corridor, the Innovation Corridor, the Green Corridor, the Growth Corridor, and the Livelihood-Enhancing Corridor.
With the help of projects like these, the two countries will fortify their partnership, and CPEC phase-2 will become a model of global economic integration and collaboration that benefits not just China and Pakistan but the entire region.
On December 2, core inflation as determined by the Consumer Price Index (CPI) significantly slowed, falling to 4.9% in November 2024 from 7.2 percent in October 2024.
The CPI-based inflation rate for the same month last year (November 2023) was 29.2%, according to PBS data.
Compared to a 1.2% gain in the prior month, it increased by 0.5% month over month in November 2024.