July 15, 2023 (MLN): Domestic bullion went down on Saturday, with 24-karat gold reaching Rs213,200 per tola, falling by Rs1,200.
To note, 24-karat gold has increased by Rs5,000 per tola, or 2.4% in the outgoing week, showing certain signs of recovery after a long downward streak owing to the agreement with IMF signed on June 29, 2023.
According to the Karachi Sarafa Association, the price of 10-gram 24-karat gold reached Rs182,785 per tola, falling by Rs1,115.
While 10-gram 22-karat gold stood at Rs167,553 per tola.
Meanwhile, the price of silver remained unchanged in the domestic market, with 24-karat silver closing at Rs2,650 per tola and the price of 10-gram 24-karat silver reaching Rs2,272 per tola.
Over the week certain crucial events impacted the commodity:
Foreign Exchange Inflows
The IMF board approved the 9-month Stand-By-Agreement (SBA) for Pakistan for an amount of $3 billion on July 12, and a day later, the State Bank of Pakistan (SBP) received the first installment of $1.2bn.
This inflow came on top of a $1bn deposit from the United Arab Emirates (UAE) on July 12, and a $2bn deposit from Saudi Arabia on Tuesday.
To note, as of June 30, 2023, the country's total reserves stood at $9.75bn, and as per Ishaq Dar the reserves will stand at around $13-14bn by this week.
Fitch Ratings
Fitch Ratings upgraded Pakistan's Long-Term Foreign-Currency Issuer Default Rating (IDR) to 'CCC' from 'CCC-' on July 10.
Global Markets
On the other hand, international spot gold closed the week at $1,955.43, rising by 1.55% over the week.
It is worth noting that gold marked its biggest weekly gain since April after signs of slowing U.S. inflation raised expectations of a pause in Federal Reserve's interest rate hikes after this month.
The U.S. consumer price index (CPI) for June 2023 on Wednesday showed that inflation eased at 3% YoY, lower than analysts’ estimates of 3.1%.
"With inflation backing off, the anticipation of further rate hikes has slightly declined, helping gold this week. But, prices are lower today as yields are ticking up," said Daniel Pavilonis, senior market strategist at RJO Futures, Reuters reported.
"Prices are going to be range-bound near term. If the Fed begins to say we don't need to raise rates any further, we can see gold rise further," he added.
Moreover, the U.S. dollar index (DXY), witnessed a declining trajectory of 6 trading sessions this week, making dollar-denominated gold cheaper for investors holding other currencies.
CME FedWatch Tool is pricing in a 93% chance of an interest rate hike at the upcoming FED meeting.
Interest rates and gold have an inverse relationship, as gold loses its attractiveness in an environment of high-interest rates.
Meanwhile, international spot silver soared by 8.04% over the week, closing at $24.94.
Copyright Mettis Link News
Posted on:2023-07-15T19:31:34+05:00
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