Silver prices in the country surged to the highest recorded level of Rs1,150 per tola after rising Rs30 on Tuesday, according to market sources. All Sindh Sarafa Association Chairman Haroon Chand explained that the local market has simply mimicked the international trend. The international price of silver has reached a 31-year high at New York’s Mercantile Exchange, with price being recorded at $38.94 per ounce.
Analysts have attributed this surge to a cocktail comprising the weakening US dollar, rising demand for energy, and liquidity shifts towards commodity markets. “We expect silver prices to continue rallying, probably more than gold in the coming days,” asserted Chand, who represents gold and silver dealers in Sindh.
Previously in March, gold prices in the country rocketed to Rs46,000 per tola, before stabilising. On Tuesday, 10 grams of gold were selling at Rs45,700 per tola after rising Rs100 over the previous close.
On the New York Mercantile Exchange, gold prices surged over $10 during Tuesday’s trade to reach $1438.69 per ounce. Many analysts expect prices of gold and silver to remain bullish as investors perceive the metals as safe havens at a time when many leading global economies are experiencing sluggish growth, and heavy monetisation of debt is likely to push up inflation.
In Pakistan, surging prices of precious metals may not create significant imbalances in the short term, according to senior economist Shahid Hasan Siddiqi. He explained that while the central bank holds reserves worth hundreds of millions in gold as well as silver, the net effect of receipts and withdrawals is consistent.
However, dealers contend that purchase of the precious metals for ornaments and jewellery is robust in the country. Analysts point out that there is a lack of well-developed markets for alternative investments, while gold and silver are relatively liquid in local markets. Consequently, prices of precious metals are likely to follow increases in international prices while responding slowly to dips.
Published in The Express Tribune, April 6th, 2011.