On Thursday, gold prices increased as demand for the safe-haven metal increased in response to soaring inflation and waning risk appetite, albeit bullion’s gains were constrained by an appreciating Pakistani rupee.
According to information provided by the All Sindh Sarafa Association, the price of gold in Pakistan increased by Rs. 2,000 per tola and Rs. 1,715 per gramme to reach Rs. 141,000 and Rs. 120,885, respectively.
Gold’s four-day losing trend, during which its local market price fell by Rs8,100, was broken by a rise of more than 1.43% per tola. new heights Inflation based on the consumer price index in Pakistan jumped to a multi-decade high of 27.3% in August, driving up the price of gold to its highest level in one and a half years.
The safe-haven asset reversed its downward trend today as statistics showing multi-year high inflation increased its appeal; nevertheless, the strengthening of the Pakistani rupee was dragging the gold market’s heels and restricting its upside. In the past, gold has been used to protect against inflation.
Instead, lower central bank interest rate increases tend to raise government bond yields, which raises the opportunity cost of owning gold, which doesn’t pay interest.
Although interest rate increases would increase the opportunity cost of owning non-yielding bullion, gold is nevertheless seen as an inflation hedge.
