Gold price touches fresh peak at Rs78,100 per tola

Metal becomes expensive following rise in world market that hit six-year high

KARACHI: The price of gold surged and touched a historic high at Rs78,100 per tola (11.66 grams) on Friday, following a surge in prices of the precious metal to a six-year high in the international market due to escalation in tensions between the US and Iran.

All Sindh Saraf and Jewellers Association (ASSJA) announced an increase of Rs800 per tola after gold price shot up $13 to $1,394 per ounce in the London market on Friday.

“Jewellers have not only passed the increase in international gold prices on to domestic consumers, but they have also incorporated the impact of rupee depreciation against the US dollar into retail prices,” an officer-bearer of ASSJA said.

Gold touches new peak at Rs70,300 per tola

“Gold has surged around $100 per ounce in the past 20 days in the world market,” Rays Commodities Chief Operating Officer Adnan Agar told The Express Tribune.

“A notable gain out of the surge of $100 per ounce was recorded since Monday when Iran shot down a US drone and the US central bank left interest rate unchanged at 2.5%,” he said.

“People always relocate investment to gold whenever international political tension escalates and the US dollar weakens against a basket of other world currencies.”

Pakistan, which is a small gold market, largely depends on imports as it does not produce the metal locally. Other factors that the local gold pricing committee incorporates into the retail price include dollar price in domestic and international markets and demand and supply of the commodity in the local market.

Future outlook

Agar said gold had become an overbought commodity across the world including Pakistan. “Investors may return to profit-booking next week if the US does not start war against Iran,” he said.

In case investors opt for profit-booking, gold will sustain the $1,350-1,360 per ounce level. “Gold will not drop over $50 per ounce in case of profit-booking,” he said.

Gold touches new peak at Rs72,200 per tola

However, the short to medium-term outlook of the commodity is bullish. “Gold will target the range of $1,500-1,550 per ounce in the short to medium run from the current six-year high near $1,400 per ounce,” he said.

The second factor, which will increase gold demand and push its prices up, will be unsuccessful meeting between US and Chinese presidents aimed at deescalating trade tensions between the two largest economies.

Published in The Express Tribune, June 22^nd, 2019.

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