Pakistan stocks and gold prices reach record highs amid expected rate cut next month

Pakistan’s stock market reached a new record high on Wednesday largely due to expectations of a rate cut in the upcoming monetary policy announcement on November 4.

Local gold prices also soared to their highest ever rate in line with the prevalent trend in international market.

Investor interest in K-Electric Limited (KEL) surged after the National Electric Power Regulatory Authority (NEPRA) approved the generation tariff for all its power plants, effective from June 2023.

Muhammad Sohail, CEO of Topline Securities, said so far in October, the Pakistan Stock Exchange has risen by 7.5%.

“Key factors behind this all-time high include a decline in secondary market yields, political stability, the successful Shanghai Cooperation Organisation (SCO) summit, and increased buying by local mutual funds.”

The KSE-100 index gained 0.84% or 727.96 points to close at 87,194.54 points.

Indian stocks stayed mostly unchanged on Wednesday. There was buying in IT, financial services, FMCG, and metal sectors early on.

Large companies are expected to keep doing better than smaller ones. Foreign investors are selling, but local investors are buying.

The market is also waiting to see how the US presidential elections will affect things.

India’s BSE 100 Index lost 0.08% or 21.07 points to close at 25,784.78 points.

The Dubai Financial Market (DFM) General Index lost 0.07% or 3.16 points to close at 4,464.19 points.

Commodities

Oil prices dropped as U.S. crude oil inventories unexpectedly increased. The American Petroleum Institute reported that crude oil stocks went up by 1.6 million barrels last week.

Meanwhile, gasoline stocks fell by 2 million barrels, and stocks of distillates (like heating oil and diesel) decreased by 1.5 million barrels.

This decline in oil prices follows recent gains, which had helped recover some of the losses from last week.

The earlier losses were due to reports that Israel would not target Iran’s nuclear and energy sites in response to an October 1 missile attack.

Brent crude prices declined 1.66% to $74.78 per barrel.

Gold prices hit a new record high on Wednesday due to fears of a full-scale war in the Middle East and political uncertainty before the close U.S. Presidential election.

Over the past year, gold prices have surged nearly 40%, rising by over $770 from $1,947 an ounce.

Investors consider gold a “safe haven” during political and economic instability, leading to a recent rally as the U.S. election nears.

Additionally, major central banks’ aggressive interest rate cuts have made gold more attractive.

International gold prices increased 0.61% reaching $2,738.03 per ounce. In Pakistan, gold prices increased by PKR 2,000 to an all-time high of PKR 285,400/tola on Wednesday.

Currency

US dollar remained steady against PKR, down 0.01% in the inter-bank market. Pakistani currency settled at 277.72, a gain of 01 paisas against the US dollar. In the open market USD was trading at PKR 280.