Gold edges higher despite rupee appreciation

• Gold price settles at Rs125,000 per tola.
• Bullion rates in Pakistan are around Rs1,500 below cost.
• Silver prices in the domestic market remain unchanged.

KARACHI: The gold price in Pakistan gained Rs50 per tola and Rs43 per 10 grams on Wednesday despite some appreciation of the rupee against the US dollar.

The bullion price settled at Rs125,000 per tola and Rs107,167 per 10 grams.

Pakistan meets almost all its gold demand through imports, and traders follow its international price in setting rates in the country. Jewellers import the metal against the US dollar and UAE dirham before converting its price into rupees.

Commodity experts believe 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.

However, it is pertinent to mention that gold rates in Pakistan are around Rs1,500 below the cost compared to the gold rate in the Dubai market.

Meanwhile, silver prices in the domestic market remained unchanged at Rs1,450 per tola and Rs1,243.14 per 10 gram today.

Bullion prices in global markets

Gold steadied around the important $1,800 level on Wednesday as a pullback in the US dollar and Treasury yields cushioned a jump in investor appetite for riskier assets.

Spot gold was last up 0.1% at $1,802.72 per ounce. US gold futures gained 0.1% to $1,802.90.

"Gold is very much a range-driven market at the moment," said Michael Hewson, chief market analyst at CMC Markets UK.

He added the metal was also unlikely to find direction in the near term as record-high Eurozone inflation pressures the European Central Bank narrative that it would not raise interest rates this year. read more

Gold is considered a hedge against inflation, but tightening monetary policy would raise the opportunity cost of holding the non-yielding metal.

The expected interest rate hikes this year globally, starting with the Bank of England on Thursday, are also likely to blunt the safe-haven boost from the Russia-Ukraine crisis, said Carlo Alberto De Casa, market analyst at Kinesis.

— With additional input from Reuters.