Gold price plunges by Rs850 per tola in Pakistan

• Gold prices in local market settles at Rs125,250 per tola. 
• Cumulatively, gold has lost around Rs750 during January.
• Globally, gold prices remained poised for their worst monthly showing since Sept.

KARACHI: Gold once again lost its shine, as it declined by over Rs850 per tola in Pakistan on Monday in line with global markets.

Bullion prices in the local market recorded a decrease of Rs850 per tola and Rs728 per 10 grams to settle at Rs125,250 per tola and Rs107,382 per 10 grams.

Cumulatively, the precious commodity lost around Rs750 during January.

In the international market, gold prices steadied but remained poised for their worst monthly showing since September as the US Federal Reserve's plans for interest rate hikes boosted the dollar, driving away bullion investors.

It shed $1 per ounce to around $1,791 in the international market, according to All Sindh Saraf Jewellers Association (ASSJA).

"The Fed's hawkishness is largely unmatched by other major central banks, strongly supporting the dollar, which represents quite a headwind for gold," ActivTrades senior analyst Ricardo Evangelista said.

The dollar index eased slightly but is still en route to a monthly gain, limiting gold demand as a firmer greenback makes bullion more expensive for holders of other currencies.

It is pertinent to mention here that ASSJA determines local prices based on rupee-dollar parity and international rates. According to the market practice, local prices of gold usually go down on the rupee's appreciation against the US dollar and rising prices of commodities in the international market.

A firmer tone to economic data and strengthening currency would undermine support for gold, which has benefited in recent times from the plunge in local currency.

It is worth mentioning that the gold rates in Pakistan are around Rs1,000 below cost compared to the gold rate in the Dubai market.

Meanwhile, silver prices in the domestic market declined by Rs20 per tola and Rs17.14 per 10 grams to settle at Rs1,450 per tola and Rs1,243.14 per 10 grams today.

— With additional input from Reuters