Gold prices hit new peak

Expert believes precious metal still undervalued in local market.

KARACHI:

Gold prices hit a record high on Wednesday, rising by Rs557 to reach Rs39,728 per 10 grams, as international bullion rates also peaked.

All Pakistan Supreme Council of Jewellers Association President Haroon Chand said that even at these rates, gold was undervalued by Rs500, against international rates. “Despite the undervaluation incentive here, local investors have not shown interest in investing in gold,” added Chand.

Chand explaining the low activity in gold said that local investors did not give much importance to gold as a safe haven, unlike foreign investors.

The last time gold prices hit a peak was exactly a month ago on March 7, when political turmoil in the Middle East and North Africa region pushed bullion prices to Rs46,000 per tola (Rs39,428 per 10 grams).

In tola terms, the precious metal was valued at Rs46,350 per tola (11.7 grams) on Wednesday,  Rs650 higher than Tuesday’s rate.

Gold prices did greatly influence the ebb of customers looking to buy jewellery. “We have been steadily losing customers, as gold rates continue to incline out of the range of people’s purchasing power,” he said.

In the international bullion market, spot gold edged up $2.75 to an all-time high of $1,460 per ounce on Wednesday, overshadowing Tuesday’s high of $1,457.25.

“Growing concerns over inflation and Eurozone debt, coupled with disagreement over the US federal reserves timescale for tightening interest rates, will continue to prompt investment diversification,” FastMarkets analyst James Moore told Reuters.

Meanwhile, silver prices also achieved new peak of Rs1,170 per tola (Rs1,002 per 10 grams) on Wednesday, rising further from its previous peak of just a day earlier.

Published in The Express Tribune, April 7^th, 2011.