Gold has continued to lose its shine, as it declined almost Rs1,900 per tola (11.66 grams) to one-year low of Rs104,200 in Pakistan on Thursday in line with trend in the commodity in global markets ahead of the release of US jobs data.
It receded $7 per ounce (31.10 grams) to around nine-month low at $1,723 at London market, according to All Sindh Saraf Jewellers Association (ASSJA). “The drop in gold is in line with the market expectations,” AA Gold Commodities Director Adnan Agar said while talking to The Express Tribune.
The correction in gold was overdue since long. Gold has declined by Rs6,650 per tola, or almost 6%, to date compared to Rs110,750 on February 22, 2021. The reopening of global economies from the lockdown and roll-out of Covid-19 vaccine may keep gold going down. The US job data to be released on Friday (March 5) would determine its immediate future trajectory.
“Gold may lose to $1,650-1,680 per ounce under the current cycle of downturn if the rate of unemployment in the US reduces in line with expectations,” he said. “Otherwise, it would bounce back to $1,820-1,850 per ounce gradually.” The job data has improved in recent months compared to peak Covid-19 times. More people should have gotten job during February since the US economy has reopened almost completely from the recent partial lockdown. “Global economic activities would gear up ahead of June-July with people being vaccinated in the US, UK and Europe.”
The short to medium term view for gold remains negative. “It may test $1,500-1,550 per ounce over the next three-month.”
Gold hit all-time high of Rs132,000 per tola in Pakistan on the next day it hit record high of $2,070 per ounce at global markets under the then growing global uncertainties amid Covid-19 in August 2020.
Agar said global investors are taking positions in Bitcoin these days instead of gold and other global assets. “A major correction in Bitcoin, which is overdue for quite a long time, may prompt investors to relocate investment into gold,” he said.
Bitcoin is trading at $51,000 these days. “A major correction may pull it down to $20,000-25,000,” he said.
“Gold has maintained downward trend at world markets since the new US President Joe Biden announced a fresh stimulus package of close to $2 trillion to support its economy recently,” ASSJA member Abdullah Abdul Razak said the other day. “China, which used to remain the single largest buyer of gold across the world, has stopped buying gold these days,” he said.
Published in The Express Tribune, March 5th, 2021.