Gold prices rose sharply in Pakistan on Friday, following a strong rally in the international market as weaker than expected US jobs data raised hopes that the Federal Reserve may slow the pace of interest rate increases.
The price of one tola of gold increased by Rs12,200 to Rs440,936, according to the All Pakistan Gems and Jewellers Sarafa Association (APGJSA). The price of 10 grams also climbed by Rs10,459 to Rs378,031.
The increase came a day after gold had gained Rs9,100 per tola, taking its price to Rs428,736 on Thursday.
In the international market, gold rose by $122 to $4,185 per ounce, including a premium of $20. The jump in global prices was reflected in the local market.
Silver prices also moved higher, with one tola gaining Rs319 to reach Rs6,764.
Weaker US jobs data supports gold
International gold prices climbed more than 1 percent on Friday and were heading for their first weekly gain in five weeks after softer than expected US employment data reduced expectations of further interest rate increases.
Spot gold rose 1.4 percent to $4,179.42 per ounce after touching its highest level since June 23. US gold futures for August delivery gained 1.6 percent to $4,191.90.
The precious metal was on track to post a weekly gain of around 2.2 percent after disappointing US labour market data eased concerns that the Federal Reserve would keep interest rates higher for longer.
The US dollar also weakened during the week, making dollar-priced gold more affordable for buyers using other currencies and supporting demand.
According to Reuters, US nonfarm payrolls increased by just 57,000 jobs last month, well below economists’ expectations of 110,000.
Following the data, traders lowered the likelihood of a September interest rate hike to about 54 percent from 66 percent before the jobs report, according to the CME FedWatch Tool.
Higher interest rates generally reduce the appeal of gold because the metal does not offer a yield. However, analysts said expectations for further rate increases have not disappeared completely, meaning gold prices could still face pressure if the economic outlook changes later this year.
Meanwhile, the World Gold Council said central banks returned to buying gold in May, with official gold reserves increasing by a net 41 tonnes during the month.
Other precious metals also advanced. Spot silver gained 2.9 percent to $62.80 per ounce, platinum rose 2.8 percent to $1,661.61 and palladium added 1.1 percent to $1,281.42. All three metals were heading for weekly gains.
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