KARACHI: On Tuesday, the price of gold increased in Pakistan, as inflation fears and a weakening currency spurred demand for the safe-haven commodity.
The price of the precious metal increased by Rs350 per tola and Rs300 per ten gram to Rs124,000 per tola and Rs106,310 per ten gram respectively.
Analysts say that investors are concerned about out-of-control inflation and are purchasing gold to protect themselves.
Home demand for the yellow metal, meanwhile, remains flat on the domestic market, according to local traders.
Imports fulfil virtually all of Pakistan’s gold demand, and dealers in the country determine pricing based on worldwide prices. Before translating the price into rupees, jewelers import the metal against the US currency and the UAE dirham.
In the international market, gold rose $1 per ounce to $1,781 per ounce, helped by a weaker dollar, but gains were limited by firmer US Treasury rates and expectations that the Federal Reserve will tighten policy more forcefully.
Gold is often used as an inflation hedge, but decreased stimulus and interest rate rises tend to raise government bond rates, reducing gold’s allure.
The US Consumer Price Index data due out on Friday might be significant in determining the US Fed’s next action.
“Gold should gradually fall on the potential of tighter policy, and if CPI comes in hotter than anticipated, that would just lead to a more aggressive Fed being factored in,” said Kyle Rodda of IG Markets.
In the meanwhile, local silver prices remained constant at Rs1,460 per tola and Rs1,251.71 per ten gramme.