Gold touches another historic high at Rs80,500 per tola

Increase attributed to surge in world market due to escalating US-Iran tensions

KARACHI: Gold prices continued to surge and reached Rs80,500 per tola (11.66 grams) on Tuesday after the precious metal hit a six-year high in the international market because of escalation in tensions between the US and Iran.

All Sindh Saraf and Jewellers Association (ASSJA) announced an increase of Rs1,300 per tola after the bullion price shot up $21 to $1,429 per ounce in the London market.

“Gold has gone out of the purchasing power of the common man in Pakistan,” ASSJA President Haji Haroon Chand said, adding the price hike had ruined the jewellery business. The massive surge in gold prices in domestic and world markets came after the US imposed new sanctions on Iran, a commodity analyst said.

Apart from this, investors have low expectations about positive outcome from the forthcoming meeting between US President Donald Trump and Chinese President Xi Jinping at the G20 summit over the weekend. They would discuss ways of overcoming trade tensions between the world’s two biggest economies.

Moreover, the possibility of rate cut by the US central bank also supported the rally in gold. US central bank Federal Reserve Chairman Jerome Powell was expected to drop a hint about rate cut in his New York address, he said.

Gold has surged around $135 per ounce in the past 25 days in the world market. A notable gain came after Iran shot down a US drone, he said.

“People always relocate investment to gold whenever international political tensions escalate and the US dollar weakens against a basket of other world currencies,” Rays Commodities Chief Operating Officer Adnan Agar told The Express Tribune recently.

Global economies like Russia and China and central banks of many countries were aggressively buying gold keeping in view the likely reduction in key interest rates globally, the analyst said. The short to medium-term outlook of the commodity is bullish. “Gold will target a range of $1,500-1,550 per ounce in the short to medium run,” he said. 

Published in The Express Tribune, June 26^th, 2019.

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