Gold jumps Rs1,300 per tola to Rs70,500 as demand soars

Meanwhile, rupee falls to Rs145 to the greenback during intra-day trading

KARACHI: Gold has once again invited investors’ attention with the return of inflationary days in Pakistan, as the safe-haven shot up to Rs1,300 per tola (11.66 grams) to Rs70,500 on Saturday.

“Gold has suddenly seen a jump in demand,” All Sindh Saraf Jewellers Association (ASSJA) President Haji Haroon Chand told The Express Tribune.

“The high demand for gold emerged on speculation that Pakistan has agreed to leave rupee free from state control under the upcoming International Monetary Fund’s (IMF) loan programme,” he said.

“There are talks in the market that the local currency would fall to Rs150-160 to the US dollar (in the inter-bank market) in the days and weeks to come. The market talks also suggest gold touching a new all-time high of Rs75,000 per tola simultaneously,” he said.

Gold hit record high of Rs72,200 per tola last month; April 2019. With the fresh increase of Rs1,300 per tola on Saturday, the metal has regained 5.5% or Rs3,700, during the outgoing week.

The massive gain in gold is seen in rupee term against a meager rise of $5 per ounce (31.10 grams) to $1,286 at world markets during the week, All Sindh Saraf Jewellers Association (ASSJA) reported.

Experts said that gold has remained a safe-haven, as investors do invest their savings in the commodity to avoid depreciation in their currency values. A local research house anticipated inflation to surge to double-digit during 2019 from 8.8% reported for the month of April.

No one was buying gold when it was available at comparatively low price in the country last week despite the association revising down the price by over Rs5,000 to Rs66,800.

“The fresh increase in the gold price in Pakistan has brought it at par with Dubai market. Earlier, it had gone under cost by Rs3,000 per tola compared to Dubai last week,” he said.

An official at the Pakistan Mercantile Exchange (PMEX), who requested anonymity, said there was no surge in gold back-cash settled commodities’ trade volume at the futures market these days. Trade volumes in gold were rather receding at PMEX these days.

The reason for no gain in gold trade volume at PMEX may be that it trades gold in dollar-value unlike rupee-value at Saraf bazaar nationwide. “PMEX may witness a change in gold trade volumes once it moves either way at international markets compared to stagnation these days,” he said.

Rupee drops in the open market

The Exchange Companies Association of Pakistan (ECAP) Secretary General Zafar Paracha, however, reported the rupee has continued to lose value against the dollar at the open market throughout the outgoing week.

With a fresh drop of Rs2.30 on Saturday, the local currency has lost a total of Rs3.60 during the week to Rs145 to the greenback in intra-day trading. At the inter-bank market, the local currency has largely remained stable and closed at Rs141.39 to the greenback at the inter-bank market on Friday. The stability is seen for past one month now. Prior to this, the central bank let the rupee depreciated by 34% since December 2017. 

Published in The Express Tribune, May 12^th, 2019.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.