Gold up Rs7,900 ahead of Fed move

Gold prices in Pakistan increased significantly on Wednesday, following gains in the international market, as investors awaited the US Federal Reserve's rate decision and guidance on the future direction of monetary policy. The price of gold rose by Rs7,900 per tola to reach Rs457,236, according to rates shared by the All-Pakistan Gems and Jewellers Sarafa Association. The sharp increase followed a decline in local gold prices a day earlier. On Tuesday, gold fell by Rs4,000 to Rs449,336 per tola. The latest increase brought the local market back in line with the upward movement in international bullion prices, where gold gained more than 1% during Wednesday's trading session. Spot gold was up 1.4% at $4,350.48 per ounce as of 1557 GMT, after touching a more than one-month low on Monday, as per Reuters. US gold futures for December delivery also rose 1.4% to $4,393.40, reflecting renewed buying interest ahead of the Fed policy announcement. Market participants were closely watching the central bank's decision, scheduled for 2 pm EDT, as well as remarks from Fed Chair Kevin Warsh for indications about the future monetary policy path. Investors were assessing the potential impact of the Fed rate decision on the US dollar, Treasury yields and non-yielding assets such as gold. According to market expectations, traders saw a 93% chance of a US rate hike later in the day. A change in rate expectations can influence gold by affecting the opportunity cost of holding bullion. The international gold rally was also supported by a decline in oil prices and the US Treasury yields. Lower yields can make non-yielding gold relatively more attractive to investors, while movements in oil prices can influence expectations surrounding inflation and future central bank policy. The combination of shifting rate expectations, lower yields and renewed demand for safe-haven assets contributed to the rise in international bullion prices. Meanwhile, silver prices in Pakistan also recorded an increase on Wednesday. Silver rose by Rs140 per tola to reach Rs6,942, according to rates quoted by the gems and jewellers association. In the inter-bank market, the Pakistani rupee closed at 277.27 against the US dollar, appreciating by three paisa from Tuesday's close at 277.30. Fed hikes rates In a late announcement, the Federal Reserve raised interest rates and flagged further increases in borrowing costs in coming months, with new US central bank chief Kevin Warsh joining a unanimous decision that effectively acknowledges the Trump administration's inability so far to control inflation, Reuters reported. While President Donald Trump had promised to lower prices on his watch, the combined impact of his global import tariffs, an energy shock following the start of the US-Israeli war with Iran, and capital spending from the AI boom has kept price pressures intense enough that the Fed felt it needed to raise its benchmark overnight interest rate by a quarter of a percentage point to the 3.75%-4.00% range.