Gold an international commodity and considered a safe-haven investment has continued to take cue from rupee’s movement against the US dollar in the last two days.
The pure 24-carat gold dropped approximately half a percentage point, or Rs300 per tola (11.66 grams), to Rs61,700 on Wednesday after the rupee became stable at Rs133.76 to the US dollar in the inter-bank market and recovered Rs5 to Rs135 in the open market.
The drop in gold at the local market was in contrast to a recovery of $2 per ounce (33.10 grams) to $1,189 in the world market.
On Tuesday, gold jumped 2.8%, or Rs1,700 per tola, to around five-and-a-half-year high of Rs62,000 following the news of the rupee facing a historic drop of 7.5% (Rs9.39) to Rs133.64 against the greenback in the inter-bank market. The rupee lost 8% (Rs10.50) and stood at Rs140 in the open market.
The increase in bullion was seen despite the fact that the yellow metal lost $7 an ounce in the global market on the day.
‘Gold has moved up and down in rupee-dollar parity,’ All Sindh Saraf and Jewellers Association President Haji Haroon Rasheed told The Express Tribune.
‘The jump (on Tuesday) in gold made it less attractive, as it lost around 30% demand in the last two days,’ he added.
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Rays Commodities Chief Operating Officer Adnan Agar added that gold has become less attractive in world markets and continued to move in a narrow band of $1,180-1,205 an ounce for the last one month.
He said currency, especially the US dollar, has become a safe haven for world investors since gold became expensive in almost all the emerging markets, including Pakistan, due to massive depreciation in their respective currencies.
The notable increase of one percentage point in US benchmark interest rate to 2.25% since January and the forecast that the Fed would settle it at 2.5% by December has also made dollar stronger and gold weaker, he added.
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‘The US-China trade war has also kept the bullion market under pressure globally,’ he said. ‘The outlook of gold in dollar denomination at world market remained weak.’
‘It may continue to move in range of $1,160-1,220 per ounce at world market in short to medium term,’ he observed.
This article provided by NewsEdge.