Mimicking movements in the international market, gold prices in Pakistan held steady on Wednesday. According to reports, easing tensions in the Middle East weakened the yellow metal’s appeal as a safe haven asset.

Historically, gold has been perceived as a credible store of value and investors typically flock to it during periods of political or economic turmoil. However, with fears surrounding a possible escalation between Iran and Israel now cooling off, both global and domestic prices have stabilized.

In the domestic market, gold prices registered only a slight increase. According to the All Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of one tola 24k gold rose by Rs300, bringing the rate to Rs354,665 per tola. The price of 10-gram gold also edged up by Rs258 causing 10-gram rates to settle at Rs304,068. 

Reports indicate that the rise in gold rates comes after a sharp drop on Tuesday, when prices plunged by Rs3,800 per tola. A director at a reputable commodities institution outlined how international prices on Wednesday fluctuated between a low of $3,311 per troy ounce and a high of $3,337 troy ounce. 

Moreover, the director highlighted that “the overall sentiment was weak”. Analysts have pointed out how gold may record a further drop if it dips below the $3,290 per troy ounce support level.

As per reports, the short term outlook for gold has turned bearish, largely due to the reduction in geopolitical risk. However, a minor rebound could be witnessed once the correction levels settle.

The decline in gold prices came alongside a drop in oil prices, which also responded to easing geopolitical tension. With Israel appearing to accept a ceasefire proposal and no immediate signs of escalation from either belligerent countries, risk premiums on both gold and oil have thinned.

 

The 12-day Iran-Israel conflict drove oil prices to a five-month high. Gold prices also experienced a sharp hike following initial strikes on June 12.  The hike in global oil prices detrimentally impacted the global economy, causing capital markets across the region to take a hit, including the Pakistan Stock Exchange (PSX).

 

 

Meanwhile, the Pakistani rupee posted a marginal gain, appreciating by five paisa in the inter-bank market, closing at Rs283.72 against the dollar, compared to Rs283.77 a day earlier. It merits a mention that an appreciation of the rupee causes gold prices to drop as gold prices are denominated in dollars.