Gold clings to gain but caution prevails ahead of Fed meeting

KARACHI: Gold retained overnight gains in Pakistan on Wednesday in line with the international market but caution prevailed ahead of a Federal Reserve policy statement later tonight as investors waited for clues on US rate hike.
Data released by the All Pakistan Sarafa Gems and Jewellers Association (APSGJA) showed that the price of gold rose by Rs450 per tola and Rs386 per 10 grams to settle at Rs151,550 and Rs129,930, respectively.
Pakistan is a small market for gold at the global level. It meets the commodity’s demand through imports as it does not produce the precious metal locally.
Accordingly, the gold price for local markets is determined by keeping in view its prices in world markets, rupee-dollar exchange rate, and demand and supply in domestic markets.
The latest price for local markets was determined to keep in view the prices at which trade took place among buyers and sellers.
In the international market, the price of the yellow metal rose by $2 per ounce settling at $1,655 as the dollar weakened, but they held to a tight range with investors reluctant to place big bets before the US Federal Reserve’s rate decision later in the day.
The Fed is due to release its policy statement at 2pm EDT (1800 GMT) and is widely expected to raise its benchmark overnight interest rate by 75 basis points, the fourth such increase in a row.
Traders will be looking out for the Fed’s commentary on future rate hikes amid growing optimism that the US central bank will slow rate increases from December.
Should the Fed pivot narrative be vindicated this week, then spot gold would have a high chance of touching $1,700 over the immediate term.
Gold bulls’ shoulders would slump if the Fed quashes the notion that policymakers are letting up in their ongoing battle against inflation.
The precious commodity’s rates in Pakistan are around Rs1,500 below the cost compared to the rate in the Dubai market.
Meanwhile, silver prices in the domestic market remained unchanged at Rs1,590 per tola and Rs1,363.13 per 10 grams.-PNP