learnedutoday
Gold prices experienced a sharp decline of over 3%, or Rs7,800 per tola (11.66 grams), in Pakistan on Tuesday, marking an 18-day low at Rs240,900, in line with global trends. This drop follows a total decrease of nearly 5%, or Rs11,300 per tola, over the past two days from the all-time high of Rs252,200 recorded on Saturday, April 20, as reported by the All Pakistan Sarafa Gems and Jewellers Association.
The significant correction in the global commodity market occurred as gold prices shed 4.02%, or $102 per ounce (31.10 grams), over the past two days, reaching $2,309 per ounce on Tuesday. Adnan Agar, Director of Interactive Commodities, attributed this correction to the de-escalation of the Middle Eastern geopolitical crisis, leading global investors to engage in profit-selling activities. Despite Israel’s retaliation against Iran, Tehran’s restraint contributed to reduced geopolitical tensions, prompting investors to sell gold.
Although gold temporarily dipped to $2,290 per ounce during the day, it later rebounded to $2,330 per ounce by evening in Pakistan. The commodity is expected to remain range-bound in the coming days, fluctuating between $2,350-2,360 per ounce on the upside and $2,250 per ounce on the downside.
Looking ahead, Agar highlighted that upcoming US data on goods pricing, scheduled for Friday, would provide new direction to the global commodity market. With rising inflation rates in the US economy, expectations for the Federal Reserve to cut interest rates in June 2024 have shifted to September 2024, suggesting a bullish medium-term outlook for gold in international markets.
Agar also expressed concerns over the rapid surge in gold prices, which spiked by $400 per ounce in the past four weeks, necessitating a market correction of around $200-250 per ounce. However, the timing of this correction remains uncertain. Gold hit an all-time high at $2,431 per ounce on April 12, 2024.
In the Pakistani gold market, historical rupee depreciation has been a significant factor contributing to the rapid surge in gold prices compared to global markets. Gold prices in Pakistan have soared significantly over the past decade, outpacing the increase in international prices due to rupee depreciation.
Meanwhile, the domestic currency, the Pakistani rupee, has experienced gradual depreciation against the US dollar, dropping by Rs0.04 to Rs278.37 in the inter-bank market. Despite reporting a nine-year high current account surplus at $619 million for March 2024, the rupee continues to depreciate slowly, primarily due to a tick-up in import value. Agar predicts further rupee depreciation in the longer run.
Haseeb Abdullah
