Gold surges to historic high at Rs105,100 per tola

Investors flee to safe haven assets on fears of second wave of coronavirus infections

KARACHI: Gold price in Pakistan rose by an additional Rs2,000 per tola on Wednesday to reach a new peak of Rs105,100 on the back of soaring prices in the international markets due to a drastic rise in coronavirus cases around the world.

The precious commodity has maintained an uptrend for the fifth successive day in line with global trend. According to All Sindh Saraf and Jewellers Association, the per tola price of gold recorded an increase of Rs6,500 or 6.6% in the past five trading sessions.

Investors resorted to relocate their capital from other securities to gold ahead of likely outbreak of second wave of the coronavirus pandemic in the world.

Talking to The Express Tribune, MAFA Capital CEO Adnan Agar said that the increase in domestic gold price was a direct impact of skyrocketing international gold price.

“Economies around the world have begun to reopen and once again, the virus cases are on a rise,” he said. “The number of virus cases around the world soared in the past five to six days and global gold price has been on an upward trajectory, which is impacting the gold rates in Pakistan.”

The second wave of coronavirus is expected to hit economies harder than the first wave hence investors have started redirecting investments to gold, he said.

International gold price

Globally, gold surged to its highest level in nearly eight years on Wednesday as rising coronavirus cases globally dented hopes of a rapid economic recovery and pushed investors towards safe haven assets.

Spot gold prices climbed 0.6% to $1,777.53 per ounce by 0957 GMT, having earlier hit their highest since October 2012 at $1,779.06. US gold futures gained 0.7% to $1,794.60.

"Everybody is worried about a second wave of the coronavirus not only in the US, but in Latin America, Brazil and Russia, so that's supporting the rally," said Jigar Trivedi, Commodities Analyst at Mumbai broker Anand Rathi Shares.

"People are expecting stimulus packages from central banks and higher the stimulus, better the prospects for gold."

The United States had a 25% increase in new cases of Covid-19 in the week ended June 21 compared with the previous seven days, while the death toll in Latin America has surpassed 100,000, a Reuters analysis found.

The European Union is prepared to bar travellers from the United States, putting the country in the same category as Brazil and Russia, the New York Times said.

[WITH ADDITIONAL INPUT FROM REUTERS]