Gold prices rise by Rs1,400 per tola in domestic market

Gold prices in the domestic market crept up on Wednesday, mirroring the upward trend in the international market. According to reports, the rise in prices can be attributed to growing anticipation regarding the release of information from the latest US Federal Reserve's policy meeting.

Reports indicate that rising prices can also be chalked up to speculative purchasing in the global market, as investors are buying the dip following a drop in gold rates. Per tola 24k gold rates have surged by Rs1,400 to rest at Rs349,300 as per data from the All Pakistan Gems and Jewellers Sarafa Association (APGJSA).

Likewise, 24k 10-gram gold prices rose by Rs1,200, causing the rate to surge up to Rs299,468. Reports outline how prices have recovered after witnessing a persistent decline, dropping by Rs3,600 per tola on Tuesday alone.

A director at a reputable financial brokerage outlined that while gold rates fluctuated sizably on Wednesday, they remained within a set trading range. Details from reports suggest that gold prices per troy ounce surged past the $3,300 barrier and touched $3,325, while a trading low of $3,290 was recorded as well.

The director of the financial brokerage reportedly highlighted how the $3,270 per troy ounce was a support level from where the market rates began a rally. He also mentioned that $3,250 per troy ounce was a key resistance level beyond which gold prices may not rise in the short term.

He explained that profit taking grips the market when rates approach higher resistance levels. Historical movements in the price of the precious metal lend credibility to his statements as higher prices tend to trigger sell-offs.

However, ongoing Russia-Ukraine tensions along with uncertainty linked to the United States’ (US) tariffs on countries continue to make gold seem an attractive investment. Historically, gold has been perceived by many as a safe-haven asset as it is a great source of value, especially in times of uncertainty.

Gold prices tend to rise when interest rates are low. This is because lower interest rates reduce the benefit of holding interest-yielding bonds compared to holding gold, which does not provide a coupon payment. 

Since gold prices are denominated in dollars, the direction of the shift in interest rates in the US market largely determines how gold rates will change. If the US Federal Reserve decides to cut interest rates, gold may witness a boost, causing gold rates in Pakistan to rise as well.