A rising dollar, which increases the cost of importing gold for a nation with a weak currency, as well as the worldwide precious metal markets’ capitulation to the hawkish US central bank attitude, caused a hiccup for gold.
The price of gold (24 carats) declined by Rs 4,000 per tola and Rs 3,429 per 10 grams to settle at Rs 204,500 and Rs 175,326, respectively, according to data issued by the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA).
Over the course of the week, gold lost a total of Rs4,500, or 2.15% per tola. It is important to note that on Monday, the value of the rare commodity reached an all-time high of Rs210,500.
Stronger-than-expected US job figures fueled concerns that the US Federal Reserve would continue its monetary tightening agenda, causing gold to drop more than 2% on Friday, reaching a more than three-week low.
The decline comes after the price rose continuously for three straight sessions due to declining foreign exchange reserves and a weak rupee, both of which increase the price of the precious metal because Pakistan imports all of the bullion it needs.
The State Bank of Pakistan’s (SBP) holding reserves decreased by $592 million to $3,086.2 million in the week ending January 27 as a result of foreign loan payments, reaching their lowest level since February 2014 and barely covering imports for 18.5 days (0.61 months).
By 1:40 p.m. ET, spot gold was down 2.6% to $1,863.66 per ounce (1840 GMT). U.S. gold futures decreased 2.8% to $1,876.6 at settlement.
The price has dropped by about $100 in only two sessions, marking the worst weekly decline in the metal since early October. Bullion is down 2.5% so far this week.
In the meantime, local silver prices dropped by Rs 100 per tola and Rs 85.74 per 10 grams, ending at Rs 2,250 and Rs 1,929, respectively.