KARACHI: Gold price increased Rs700 per tola (11.66 grams) to an almost four-week high at Rs70,700 in Pakistan in line with uptrend of the commodity at world markets due to escalation in US-China trade tensions, traders said.
Besides, weakness of local currency against the US dollar also played an important role in enhancing the price of the imported commodity in the local market, they added.
“The price of yellow metal increased $14 per ounce (31.10 grams) to a one-month high of $1,298 at world markets,” All Sindh Saraf and Jewellers Association (ASSJA) reported on Tuesday. Gold has remained a ‘safe haven’ and people around the world invest in it during inflationary days and when political tensions escalate at a global level.
Gold prices hit all-time high at Rs68,150 per tola
“Escalation in US-China trade war enhanced the gold price as the commodity invited renewed buying at world markets,” Rays Commodities Chief Operating Officer Adnan Agar told The Express Tribune.
Due to the war, the two countries raised tariffs on 70-80% imports from each other to damage the opponent’s economy. Besides, the local currency has weakened to Rs144 against the US dollar at open market on speculation that Pakistan was set to officially devalue the rupee under the International Monetary Fund’s (IMF) 39-month loan programme worth $6 billion.
“This (likely rupee depreciation in inter-bank) also played an important role in increasing the bullion price at the local market,” he said.
Experts claim that inflationary days are back in Pakistan following the signing of IMF bailout package on Sunday. Therefore, the ‘safe-haven’ has continued to remain on local investors’ radar these days.
The likely rupee devaluation to Rs160 against the greenback in the next couple of months, increase in key interest rate by two percentage points coupled with upward revision of energy tariff are all a part of stringent conditions which Pakistan has to implement to win the first instalment of IMF loan in months to come.
“The implementation of these measures will increase inflation,” they said.
The local currency further dropped Rs0.30 to Rs144 against the dollar at the open market on Tuesday, as no authority concerned came up to clarify speculation that the government has agreed to officially let the rupee devalue in the days and weeks to come, a currency dealer said.
The currency, however, remained stable at Rs141.39 to the US dollar at inter-bank market.
Published in The Express Tribune, May 15th, 2019.