Gold prices in Pakistan surged on Thursday, with the price of one tola rising by Rs13,700 as the local market followed a sharp increase in international bullion rates.
According to rates released by the All Pakistan Gems and Jewellers Sarafa Association (APGJSA), gold reached Rs471,936 per tola. The price of 10 gram gold also increased by Rs11,746, reaching Rs303,609.
The latest rise came after a decline on Wednesday, when the price of gold fell by Rs3,700 to Rs458,236 per tola. Thursday’s gain more than reversed that loss and pushed local gold prices to a new high.
The international gold rate also moved higher, increasing by $137 to $4,495 per ounce, including a $20 premium. US gold futures were little changed at around $4,544.50 per ounce.
Silver also recorded a strong increase in the local market. Its price rose by Rs369 per tola to reach Rs7,169.
Gold prices have remained sensitive to movements in the US dollar, interest rate expectations and wider economic uncertainty. The dollar was trading close to a three month low on Thursday, which helped support demand for gold.
The US Treasury Department also announced that it would double the size of its liquidity support buyback operations for longer dated Treasury notes and bonds. The move is aimed at easing pressure in the US bond market.
Market analysts said the recent volatility in gold prices should not automatically be seen as the start of a longer downward trend.
Ricardo Evangelista, senior analyst at ActivTrades, described the recent weakness in gold as a short term correction rather than the start of a broader decline.
He said the outlook for gold over the coming weeks would depend largely on expectations about US Federal Reserve policy and developments in the Persian Gulf.
Investors are also watching signals from the Federal Reserve after minutes from its latest meeting showed growing concerns over inflation. Several policymakers indicated that they could support higher interest rates if inflation remains a problem.
Higher interest rates can weigh on gold because the metal does not pay interest. However, uncertainty over inflation, currency movements and geopolitical developments can continue to support demand for the precious metal.
For buyers in Pakistan, the latest move means gold prices have returned to a strong upward trend after Wednesday’s brief decline. Further changes in global gold prices and the rupee-dollar exchange rate are likely to influence local rates in the coming sessions.