Gold prices in Pakistan rose sharply on Friday, gaining Rs5,900 per tola as the precious metal recovered in the international market amid a weaker US dollar and falling oil prices.
The price of gold reached Rs440,936 per tola, while 10-gram gold climbed Rs5,058 to Rs378,031, according to rates released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).
The latest increase followed a smaller gain on Thursday, when gold rose Rs600 per tola to settle at Rs435,036.
In the international market, gold gained $59 per ounce to reach $4,184, according to the APGJSA. Spot gold was up 1.4 percent at $4,189.99 per ounce by 8:42am GMT, putting it on course for a weekly gain. US gold futures for December delivery also rose 1.4 percent to $4,215.30 per ounce.
Silver prices in Pakistan also moved higher, rising Rs144 to Rs6,512 per tola.
Why are gold prices rising?
A softer US dollar and easing oil prices helped support gold on Friday, as investors assessed the outlook for interest rates in the United States.
Oil prices fell after US President Donald Trump said Washington would not attack Iran before next month’s US midterm elections. His remarks eased concerns about further disruptions to energy supplies from the Middle East, where the conflict has unsettled global markets.
Lower oil prices could help ease inflationary pressure and reduce the need for further interest rate increases by the US Federal Reserve. That would support gold by making the non-yielding asset more attractive to investors.
A weaker dollar also makes gold cheaper for buyers using other currencies, potentially boosting demand.
Nikos Tzabouras, senior market analyst at Tradu.com, said the latest developments strengthened the case for the Fed to hold interest rates this month. He added that a weaker dollar and easing bond yields had created favourable conditions for gold to recover.
However, the outlook remains uncertain. Tzabouras warned that geopolitical risks, persistent inflation and elevated bond yields could continue to weigh on the metal.
Gold is often used as a hedge against inflation and economic uncertainty. But when interest rates rise, investors may favour interest-bearing assets over gold, which does not offer a regular return.
St Louis Federal Reserve President Alberto Musalem said on Thursday that the central bank would need to raise interest rates again to bring inflation back to its 2 percent target. He did not specify what action policymakers should take at their meeting later this month.
The Fed raised its policy rate by 0.25 percentage points last month, with all policymakers voting in favour.
According to CME’s FedWatch tool, traders were pricing in a 19 percent chance of another rate increase in October and an 84 percent probability of at least one 0.25 percentage-point hike by December.
Other precious metals also advanced on Friday. Spot silver gained 1.7 percent to $60.36 per ounce, platinum rose 3.4 percent to $1,690.49, and palladium climbed 3.7 percent to $1,162.18.
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