ISLAMABAD
Gold prices in the country surged by Rs900 (0.38 percent) per tola last week due to political and economic uncertainties despite falling for the third straight week by 1.6 percent in the international bullion markets and a 0.16 percent uptick in Pakistani rupee against the US dollar during the period under review.
The gold rate in Pakistan for a single tola of 24-karat reached Rs236,200 from Rs235,300 a week earlier, according to the data provided by All Sindh Sarafa Jewellers Association. Similarly, the gold rate for 10 grams of 24-karat reached Rs202,500 from Rs201,750 on a week-on-week basis, showing an increase of Rs750. The gold price for 22-karat was recorded at Rs215,650 against Rs213,000 per tola a week ag0. Likewise, the gold rate for 10 grams of 22-karat reached Rs 185,620 from Rs184,900.
The Pakistani rupee remained firm against the US dollar last week, snapping a two-week losing streak and inching up by 0.16 percent on a week-on-week basis.
According to the figures shared by the central bank, the dollar opened at Rs285.62 in the interbank market on Monday last and closed at Rs285.15 on Friday. During the preceding two weeks, the local unit depreciated by 0.19 percent and 0.53 percent against the greenback in the interbank market.
In global markets, the gold price extended its slide for the third straight week and fell from $1,977.7 to $1,946.2 per ounce, touching its lowest level in more than two months below $1,940 on Thursday amid rising US Treasury bond yields – which have been at the highest level since mid-March – and persistent US dollar strength. Market participants stay focused on fresh developments surrounding the US debt-limit talks. June 1 is reportedly the deadline for Republicans and the White House to reach a deal to raise the debt ceiling.
The risk-averse market atmosphere amid a lack of progress in the US debt-limit talks helped the dollar hold its ground and didn’t allow gold to stage a comeback after the previous weeks’ sharp decline. A surge in US Treasury bond yields, which reached 3.8 percent last week, further weighed on gold price. A possible uptick by an additional 50 basis points in the US policy rate this year further brought gold under heavy bearish pressure as US yields continued to push higher.
The domestic gold market has remained volatile for the last one year due to economic and political turmoil, high inflation, and currency depreciation. People prefer to buy the yellow metal in such times as a safe investment and a hedge to protect themselves against inflation and currency depreciation.
From a technical perspective, the Relative Strength Index (RSI) has turned south, moving away from 70. The immediate support for gold is at the $1,950 area. A break below this level could trigger more losses towards $1,930. However, if gold holds above that level, it could set the stage for a rebound. Recovery above $1,975 would alleviate the bearish pressure in the short term. Economists expect that developments surrounding the US debt-limit negotiations will help markets decide whether gold shakes off the bearish pressure.
