Gold prices resume upward trend in Pakistan, global markets

Web Desk/Reuters: Contrary to Monday's downward trend, gold prices in Pakistan soared in the local bullion markets on Tuesday in line with their gain in the international market.

Gold price per tola reached Rs539,562 after a jump of Rs6,200 during the day.

Similarly, 10-gram gold was sold at Rs462,587 after it increased by Rs5,316, according to rates shared by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).

On Monday, gold price per tola reached Rs533,362 after a loss of Rs6,500 during the day. The international rate of gold jumped by $62 to reach $5,168 per ounce (with a premium of $20).

Meanwhile, the price of silver also increased by Rs460 to reach Rs9,354 per tola.

Gold prices rose on Tuesday, supported by a weaker US dollar and easing energy costs after US President Donald Trump suggested that the war in the Middle East could end soon.

Respite from a potential war-driven surge in inflation would likely reduce the chances of central banks raising interest rates, a positive for non-yielding gold.

Spot gold rose 0.5 per cent to $5,161.54 per ounce, as of 04:29 GMT. US gold futures for April delivery rose 1.3pc to $5,171.10.

The dollar fell 0.3pc, making greenback-priced bullion cheaper for holders of other currencies.

Gold prices rose “due to the news flow from US President Trump himself, stating that there is a potential for de-escalation… So what we could see is that potential inflation expectation starts to tone down given this dramatic fall in oil price,” said Kelvin Wong, a senior market analyst at OANDA.

Oil prices fell by more than 10pc following Trump’s comments.

But, he also warned that US attacks could rise sharply if Iran sought to block tanker traffic through the Strait of Hormuz, which handles one-fifth of the world’s oil supply.

The war has effectively shut the strait, stranding tankers for over a week and forcing producers to halt output as storage fills up, sending energy prices soaring.

Gold prices fell by as much as 2pc on Monday as higher energy costs fanned inflation concerns and further dimmed the prospects for a near-term cut in interest rates by the US Federal Reserve.

Investors expect the Fed to keep rates steady at the end of its two-day meeting on March 18, per CME Group’s FedWatch tool.

Gold is seen as an inflation hedge, but low rates reduce the opportunity cost of holding it as a zero-yield asset.

Markets are now awaiting the US consumer price index for February, due on Wednesday, and Personal Consumption Expenditures index - the Fed’s preferred inflation gauge - on Friday.

Spot silver rose 1.4pc to $88.25 per ounce. Spot platinum fell 0.2pc at $2,177.02 and palladium lost 0.9pc to $1,675.58.