Gold spree continues, hits Rs174,900/tola

• The rally in the price of gold continued where it hit the all-time high.
• The prices of gold change in line with the movement of the rupee.
• Gold is cheaper by Rs4,000/tola compared with its price in Dubai.

KARACHI: The rally in the price of gold continued where it hit the all-time high of Rs174,900 on Monday as the investors opted for a safe-haven due to faltering macroeconomics of the country.

Gold 24kt gained Rs2,200/tola and Rs1,886/10 grammes to hit Rs174,900/tola and Rs149,948/10 grammes, respectively.

The yellow metal continued to break records of all-time high as weakening rupee, slumping stocks and political uncertainty resulted in dampened investors’ sentiments.

The prices of gold change in line with the movement of the rupee, which remained under pressure owing to reduced business activities and lack of inflows to boost the foreign exchange reserves.

The foreign exchange reserves held by the State Bank of Pakistan (SBP) fell $14.9 million to reach 6.7 billion during the week ended December 9, compared with $6.71 billion on December 2.

The central bank, without giving specific reason, said that the “SBP’s reserves did not record any major change during the week ended on December 9, 2022”.

Overall, the liquid foreign currency reserves held by the country, including the net reserves held by banks other than the SBP, stood at $12.57 billion. The net reserves held by banks amounted to $5.87 billion.

On the political front, the country is faced with another crisis as Pakistan Tehreek-e-Insaf (PTI) has called for the dissolution of the provincial assemblies. PTI is holding mass rallies and protests all across the country to demand early elections.

The significant difference between exchange rates in the interbank foreign exchange market and open markets has also added fuel to the rising prices of the yellow metal, a common phenomenon that when rates in the open market are high gold prices also rise.

Despite gold hitting an all-time high in Pakistan, its price still stood below cost. Gold is cheaper by Rs4,000/tola compared with its price in Dubai.

In the international market, gold prices ticked higher on Monday as a tepid dollar made bullion less expensive for overseas buyers, although the prospects of further interest rate hikes by the US Federal Reserve next year kept gains in check.

Spot gold was up 0.1 per cent to reach $1,794.60/ounce, while gold futures rose 0.2 per cent at $1,804/ounce.

Gold prices attempted to recoup losses, considering that despite the hawkish takeaway from the US Fed, upside reaction in the dollar and yields still seem more measured.

In the local market, the prices of silver remained at Rs2,020/tola and Rs1,731/10 grammes, while the international silver prices gained 0.3 per cent to reach $23.29/ounce.

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