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Gold gains as traders eye US Federal Reserve meeting

371754 054308 updates

A worker polishes gold bars. — AFP/File
A worker polishes gold bars. — AFP/File
  • Bullion rates in Pakistan record an increase of Rs100 per tola to close at Rs113,000 on Tuesday.
  • The prices of gold in Pakistan are around Rs1,000 below cost compared to the gold rate in the Dubai market.
  • Yellow metal records an increase of $7 to close at $1,765 in the world market.

KARACHI: Gold prices in the local bullion market gained Rs100 per tola and Rs86 per 10 grams on Tuesday to close at Rs113,000 per tola and Rs96,880 per 10 grams in line with rising prices in world markets.

The precious commodity closed at Rs112,900 per tola and Rs96,794 per 10 grams on Monday.

Speaking to, AA Commodities Director Adnan Agar said: “Tomorrow is an important day for the commodity as the US Federal Reserve is scheduled to announce its policy.”

It is expected that if the US tightens its policy and withdraws its bond-buying programme, the “gold market will suffer”.

The analyst added that gold prices will remain volatile till the end of the calendar year 2021. “It is also expected that the yellow metal will record losses in the short-run,” Agar maintained.

The US central bank is scheduled to conclude a two-day meeting on Wednesday. Some market watchers believe it could announce tapering of asset purchases in the fourth quarter, and as a result, push gold lower.

Reduced central bank stimulus and interest rate hikes which tend to lift bond yields, raise the opportunity cost of holding non-interest bearing gold. It also helps boost the dollar, further weighing on bullion.

In the international market, gold edged higher on Tuesday as a subdued dollar provided support though caution ahead of a policy meeting where the US Federal Reserve might clarify its tapering plans kept trading to a tight range.

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The yellow metal recorded an increase of $7 to close at $1,765 in the world market.

It is pertinent to mention that the gold rates in Pakistan are around Rs1,000 below cost compared to the gold rate in the Dubai market.

Meanwhile, silver prices in the domestic market rose Rs20 per tola and Rs17.15 per 10 grams to close at Rs1,400 per tola and Rs1,200.27 per 10 grams on Tuesday.

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