The per tola price of 24-karat gold witnessed an increase of Rs1,200 on Saturday and was traded at Rs187,200, up from Rs186,000 the previous trading day. The price of 10 grammes of 24-karat gold also increased by Rs1,029 to Rs160,494 according to All Sindh Sarafa Jewellers Association.
Although gold is often used as an inflation hedge, it is quite vulnerable to monetary tightening, which raises the opportunity cost of owning the bullion, which is typically a non-yielding asset like other precious metals. In other words, a precious metal investment cannot be “put to use” to try to make a profit.
According to the jewellers association, gold in the local market continued to be “undercost” by Rs3,000 a tola when compared to the Dubai market, maintaining its Friday trend.
Dealers claimed it was difficult to determine if the potential increase in the policy rate of 100–200 basis points (BPS) had been included in the price of the yellow metal.
According to a research report from Pearl Securities, the State Bank of Pakistan (SBP) may raise the policy rate by 100 to 200 basis points to reduce ongoing inflationary pressures.
