Gold Prices Fall in Global and Local Markets

Gold prices witnessed a sharp shift this week, with declines in both the global bullion market and Pakistan’s domestic market. The gold price drop, driven by weaker international rates, also came alongside a strengthening Pakistani rupee against the US dollar, signaling a changing trend in the financial landscape.

Global Gold Prices Edge Lower

In the international bullion market, gold prices fell by USD 3, settling at USD 3,397 per ounce. Market analysts attribute this decline to a stronger dollar in global trade and subdued investor demand for safe-haven assets. As central banks in major economies maintain interest rate stability, gold’s appeal as a hedge has slightly weakened.

Silver prices followed a similar path globally, mirroring the reduced investor appetite for precious metals. This global pressure influenced local markets almost immediately.

Domestic Gold Market Mirrors Global Trend

In Pakistan, domestic gold rates reacted quickly to the international drop. Prices fell by Rs300 per tola, bringing the rate to Rs362,400. Similarly, the price for 10 grams of gold declined by Rs257, now standing at Rs310,699.

Silver prices also slipped in the local market. The rate per tola dropped by Rs9 to Rs4,064, while 10 grams of silver decreased by Rs7, settling at Rs3,484.

Traders note that gold’s recent price weakness could be temporary, with upcoming global economic data likely to set the tone for the next move.

Read: PSX Halts Climb At 145,383 Amid Profit-Taking

Rupee Gains Ground Against US Dollar

While precious metals saw a dip, the Pakistani rupee gained strength against the US dollar last week. This appreciation was fueled by expectations of fresh foreign inflows from a possible Eurobond issuance. Additionally, a government crackdown on dollar smuggling and a steep decline in global crude oil prices bolstered market confidence.

In the open market, the dollar’s rate slipped below Rs285 for the first time in over two months. In the interbank market, it closed at a two-and-a-half-month low, narrowing the weekly gap between the two markets to just Rs2.44.

Remittances and Trade Relations Boost Sentiment

Economic sentiment improved further due to a notable 7.4% rise in remittances during July. This boost in foreign currency inflows, coupled with better trade relations with the United States, strengthened the rupee’s position.

Improved foreign exchange supply helped meet external payment needs and import requirements without depleting reserves. Market observers suggest that if these inflows continue, the rupee could maintain its upward trend in the near term.

Currency Market Overview

In the interbank market, the US dollar fell by Rs0.25 to Rs282.46. The British pound experienced a sharper drop of Rs7.19, closing at Rs379.86. The euro also slid by Rs6.68, ending the week at Rs329.37.

The Saudi riyal eased by Rs0.10 to Rs75.26, while the UAE dirham fell by Rs0.07 to Rs76.90. These minor adjustments reflected the broader strength of the rupee and improved forex supply conditions.

In the open market, the dollar shed Rs0.40 to close at Rs284.90. The Saudi riyal dipped by Rs0.15 to Rs75.85, and the UAE dirham dropped by Rs0.15 to Rs77.55.

Interestingly, the British pound moved against the trend in the open market, rising by Rs3.96 to Rs382.73. The euro also gained Rs1.70, closing at Rs332.20. Analysts attribute these gains to the respective currencies’ resilience against the dollar globally.

Outlook for Gold and Currency

Market watchers believe gold prices in Pakistan will continue to take cues from the international market. Any rise in global bullion rates could quickly translate into domestic price recovery. However, if the rupee’s strength persists, it may limit the extent of gold’s local rebound.

For the currency market, the immediate focus is on the anticipated Eurobond inflows and global oil price trends. Stable remittances, strict regulation of forex trade, and healthy reserves could help maintain the rupee’s momentum.