Gold price surges by Rs2,200 per tola amid renewed interest in investment

On Friday, the price of 24-karat gold in Pakistan increased by Rs2,200, bringing the total to Rs249,000 per tola. This rise follows the release of the US inflation report for June, which indicated the lowest price gains since 2021, sparking renewed interest in gold as an investment.

Currently, the local price is about Rs2,800 lower than its actual cost, a discrepancy attributed to the reduced purchasing power of consumers.

According to the Karachi Sarafa Association, the price of 24-karat gold is recorded at Rs213,477 per tola for a 10-gramme unit, reflecting a rise of Rs1,886 per tola. Meanwhile, the price of 22-karat gold has also seen an increase, now priced at Rs195,687 per 10-gramme.

In contrast, silver prices in the domestic market have remained stable, with 24-karat silver being sold at Rs2,900 per tola and Rs2,486 per 10-gramme.

On the global front, spot gold has levelled off after surpassing $2,400 per ounce, buoyed by the cooler-than-expected US inflation figures, which have raised hopes for an interest rate cut. On Thursday, gold closed 1.9 per cent higher, marking its most significant gain since March.

The recent inflation data revealed the slowest growth in core consumer prices, the Federal Reserve’s preferred measure, since 2021.

This development has led traders to anticipate a September rate cut, with expectations for at least two quarter-point reductions in 2024, according to Bloomberg. Such lower borrowing costs are generally favourable for bullion, which does not yield interest.

Gold’s current rally, which has seen a 17 per cent increase this year, is supported by strong demand from central banks, geopolitical tensions, and increased purchases from Chinese consumers, as the metal approaches its all-time high of $2,450.07 set in May.