ISLAMABAD: Gold prices in Pakistan surged to an all-time high last week despite the rupee holding ground against the US dollar, as credit conditions in the US and some other economies tightened while China’s PMI data for April came in lower than expected. The gold rate in the country for a single tola of 24-karat reached Rs225,500 while for 22-karat, it was recorded at Rs 206,798 per tola. Similarly, the gold rate in the country for 10 grams of 24-karat reached Rs193,400 while for 22-karat, it was recorded at Rs 177,250. The gold rate has been on a steady uptrend in Pakistan due to massive depreciation of the rupee against the US dollar for the past one year. During such times, people prefer to buy yellow metal to protect themselves against inflation and currency depreciation. Internationally, the gold futures were available at $2,018.60 per ounce at the end of the week. Gold price came under heavy bearish pressure on the last day of the week and tested $2,000 before recovering to the $2,018. TLTP
After the data from the US showed that Nonfarm Payrolls rose by 253,000 in April, much higher than the market consensus of 179,000, the 10-year US T-bond yield surged 2 percent, causing the gold price to retreat.
The gold price is inversely proportional to US treasury bond yields, particularly the 10-year, which headed lower at the start of the week. However, the 10-year US T-bond yield surged on Friday and rising yields stopped gold prices going forward. A sharp intraday rise in the US government bond yields turned out to be a key factor driving flows away from the non-yielding gold prices.
Another reason that weighed on gold prices is that global demand for gold fell during the first quarter of 2023. According to a report released by the World Gold Consortium, large purchases made by central banks and Chinese consumers were offset by investors’ buying. Gold price is continuing to hold its own just above the $2,000 mark.
Economists expect the yellow metal to remain stable before rising towards the end of the year. They were of the view that the gold price will remain roughly around $2,000 during the next two quarters. As soon as the Federal Reserve raises a clearer prospect of an interest rate turnaround, the gold price is likely to climb lastingly and more noticeably above the $2,000 mark, they added.
