Gold prices in Pakistan increased on Wednesday, with the price for 24-carat gold rising to 17,998.48 Pakistani Rupees (PKR) per gram, representing a PKR 98.06 increase from the previous day. The price for 24-carat gold per tola also saw an increase to PKR 209,930.79 from PKR 208,787.08.
The rise in gold prices in Pakistan is influenced by various factors, including the global market trends. In recent news, the US inflation data released on Tuesday has tempered prospects of an early interest rate cut by the Federal Reserve, which continues to undermine the non-yielding gold price. The Bureau of Labor Statistics reported that the US CPI rose by 0.3% in January and softened to a 3.1% YoY rate from the 3.4% in December, beating expectations. This data, along with the Core CPI exceeding consensus estimates, has given the Fed little reason to rush to cut interest rates.
Furthermore, the CME Group’s FedWatch Tool indicates just over a 35% chance of a rate cut in April, suggesting that the Fed will likely not cut rates until the June policy meeting. These expectations have lifted the yield on the benchmark 10-year US government bond to its highest level since December 1 and have acted as a tailwind for the US Dollar, ultimately influencing global gold prices.
Additionally, gold remains an asset that is widely considered as a safe-haven investment during turbulent times. It has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times.
The price of gold can be influenced by a wide range of factors, including geopolitical instability, fears of a deep recession, and fluctuations in the US Dollar. As a yield-less asset, gold tends to rise with lower interest rates, while a stronger Dollar tends to keep the price of gold controlled. These factors, along with others, contribute to the daily fluctuations in gold prices in Pakistan and around the world.
