Gold Price Falls Rs6,500 a Tola in Pakistan
The gold price falls in Pakistan were sharp on Friday, with the metal shedding Rs6,500 per tola as international bullion markets came under pressure from a stronger US dollar and rising Treasury yields after stronger-than-expected US employment data.
In the local market, gold fell to Rs429,136 per tola, while the price of 10-gram gold decreased by Rs5,573 to Rs367,914, according to rates released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).
The gold price falls followed a Rs9,600 per tola increase on Thursday, when domestic gold prices had climbed to Rs435,636. The two-day swing leaves gold Rs3,100 higher than it was on Wednesday, a reminder of how volatile the market has become.
Why the gold price falls
The trigger was the US dollar. International spot gold fell 1 per cent to $4,047.10 per ounce by 8:46am ET on Friday, after touching an intraday low of $4,033.29. US gold futures for December delivery also declined 1.4 per cent to $4,057.20 per ounce.
The dollar strengthened 0.7 per cent to its highest level since October 29, making dollar-denominated bullion more expensive for holders of other currencies. Benchmark 10-year US Treasury yields also advanced, adding pressure on the precious metal. When yields rise, gold, which pays no interest, becomes less attractive to hold.
Stronger-than-expected US jobs data fed both moves. It pushed the dollar higher and lifted yields, and gold, priced in dollars, took the hit.
Spot gold, however, remained up 4.5 per cent for the week, putting it on track for its strongest weekly performance since late August. The Friday fall, in other words, trimmed a strong week rather than reversing it.
What traders expect next
Interactive Commodities Director Adnan Agar said international gold prices had fluctuated between a high of $4,109 and a low of $4,029, with the market trading around $4,050.
He said the direction of global equity markets on Monday could play an important role in determining gold’s near-term movement. He cautioned that a possible sharp correction in international stock markets could put additional downward pressure on gold, as investors facing margin calls might sell their bullion holdings to generate liquidity.
When asset prices fall, investors who have borrowed to trade are often required to deposit additional funds to maintain their positions. To meet these margin requirements, they may liquidate other holdings, including gold, potentially increasing selling pressure on the precious metal.
He described a possible Monday sell-off in global equity markets as a risk rather than a certainty, adding that investors would need to monitor market developments. If equity markets avoid a correction, however, gold could gradually regain upward momentum as prices begin to stabilise, he said.
Agar added that gold had previously touched a low of around $3,850 during the year and had not fallen below that level since, making the coming sessions important for determining its next direction.
Silver falls and the rupee edges up
Silver prices in the domestic market declined by Rs85 per tola to Rs5,678, tracking gold lower.
The rupee gained Rs0.01 to close at Rs276.66 against the US dollar on Friday, compared with Thursday’s closing rate of Rs276.67. The near-flat rupee means the local gold fall was driven almost entirely by the international price, not by currency movement.
Gold had jumped Rs13,900 per tola earlier in the week, and rose a further Rs9,600 on Thursday. Friday’s fall gives back part of those gains, but the metal remains well above its levels of a week ago. The rupee has also been steady against the dollar in recent sessions.
For buyers in Pakistan, the message is mixed. Gold is cheaper than it was on Thursday, but the market is moving in large daily steps in both directions, and the next move depends on global equities and the dollar.
How much did gold fall in Pakistan?
Gold fell Rs6,500 per tola on Friday to Rs429,136. The price of 10-gram gold fell Rs5,573 to Rs367,914.
Why did the gold price fall?
A stronger US dollar and rising Treasury yields pressured international gold after stronger-than-expected US jobs data. Spot gold fell 1 per cent to $4,047.10 per ounce.
What happened to gold earlier in the week?
Gold rose Rs9,600 per tola on Thursday to Rs435,636, after a Rs13,900 jump earlier in the week. Friday’s fall leaves it Rs3,100 above Wednesday’s level.
What about silver?
Silver fell Rs85 per tola in the domestic market to Rs5,678.
