Gold surged to a new all-time high of Rs257,300 per tola (11.66 grams) in Pakistan on Friday, driven by weaker US employment data and escalating political tensions in the Middle East.

According to the All Pakistan Sarafa Gems and Jewellers Association, the precious metal jumped Rs2,400/ tola in a single day, marking a cumulative gain of Rs5,000/ tola over the past three consecutive working days.

The association reported that bullion increased by $26 per ounce (31.10 grams) to $2,468 at the time of determining the local market price. Gold reached an intra-day high of $2,477, just $6 below the record high of $2,483 set on July 17, 2024.

Speaking to The Express Tribune, Adnan Agar, Director at Interactive Commodities said that gold prices rose sharply due to disappointing US employment data, which showed significantly fewer new jobs created than expected and an increase in the unemployment rate to 4.3% from 4.1% in July. This poor data has fuelled speculation that the US Federal Reserve may cut interest rates for the first time in four years in September 2024.

Additionally, global investors took fresh positions in gold following the assassination of Hamas leader Ismail Haniyeh, which has heightened tensions in the Middle East. Agar projected that gold prices would remain high in the short to medium term, with global research houses and investment banks predicting it could test $2,700 per ounce in 2024. He noted that only a peace agreement and prolonged ceasefire in the Middle East could potentially lower gold prices, but the chances of such developments remain low.

Rupee strengthens

On the other hand, the Pakistani rupee gained Rs0.16 to close at Rs278.50 against the US dollar in the inter-bank market. This marked the second consecutive day of gains following Finance Minister Muhammad Aurangzeb’s confirmation that the IMF Executive Board is likely to approve a new $7 billion loan program in August 2024

According to data from the State Bank of Pakistan (SBP), the currency has cumulatively increased by Rs0.24 per dollar over the past two working days. Additionally, an increase of $75 million in the country’s foreign exchange reserves to $9.10 billion for the week ended July 26, 2024, suggested that the supply of foreign currency remains higher than demand, supporting the rupee against the greenback.

The currency has maintained its current levels for over four months and is projected to stay around these levels for another three to six months.