Gold shines in Pakistan as the rupee falls
Gold continued to rise after the rupee fell, as the International Monetary Fund’s (IMF) silence on the revival of the bailout program fueled fears that the country was being pushed into bankruptcy.
According to the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of gold (24 carats) increased by Rs2,300 per tola and Rs1,973 per 10 gram to Rs207,900 and Rs178,241, respectively.
The IMF requires friendly countries to fulfill external financing commitments before releasing bailout funds; however, the delay dampened investor sentiment in the currency market, boosting demand for gold.
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The gold price moves in tandem with the rupee-dollar parity because the country imports almost all of its gold, and traders set domestic rates based on the international price.
Jewellers buy the metal in US dollars and UAE dirhams before converting it to rupees.
Furthermore, an increase in seasonal demand fueled price increases in the local bullion market. In two sessions, the precious commodity gained Rs3,300 per tola (Tuesday-Wednesday).
The association also stated that the price of gold in Pakistan is Rs9,000 per tola “undercost” when compared to the Dubai market, indicating that the Pakistani gold market is currently cheaper than the global market.
Meanwhile, domestic silver prices remained unchanged at Rs2,250 per tola and Rs1,929 per 10 grams, respectively.
In the international market, the per-ounce price settled at $1,967, a $10 increase, despite investors returning to riskier assets, betting that the risks of contagion from the global banking crisis have been mitigated for the time being.