The price of gold rose by Rs450 per tola in the local market for the fourth consecutive session on Monday. This increase can be attributed to the rise in international market prices. According to the data provided by Karachi Sarafa Association, the price for one tola of 24-karat gold increased to Rs217,900 from Rs217,450. Similarly, the price for 10 grams of 24-karat gold increased to Rs186,814 from Rs186,428, showing an increase of Rs386. The price for 10 grams of 22-karat gold also saw an increase, rising to Rs171,246.
This recent increase in gold prices follows a decline of Rs550 per tola last week, making it the second consecutive week of price decrease in the country. However, the trend has now reversed with gold prices on the rise again.
In the international market, gold futures were available at $2,052.50 per ounce, showing an increase of $3.80. This increase can be attributed to the strengthening of the US dollar by $2 and predominant buyers contributing an additional +$5.80, as reported by the Kitco Gold Index.
The continued increase in gold prices can be linked to the market’s expectation of the Federal Reserve (Fed) reducing borrowing costs from March. This anticipation has been further solidified by the release of the surprisingly soft Producer Price Index (PPI) numbers for December, which has convinced market participants of the likelihood of a Fed rate cut.
Additional Insight:
The increase in gold prices is also often linked to market uncertainty and volatility, as investors tend to flock to the precious metal as a safe haven in times of economic instability. Factors such as geopolitical tension, inflation, and currency devaluation can also contribute to the rise in demand for gold, leading to higher prices. Moreover, the ongoing COVID-19 pandemic has also prompted investors to seek refuge in gold, as it is perceived as a stable asset during times of crisis. This has contributed to the recent surge in gold prices.
