The price of gold has surged to an all-time high after one-tola and 10-gram rates hit a fresh peak of Rs172,200 and Rs148,062 respectively on Saturday. This record-breaking spree has been continuing for the past many months due to the precarious economic situation of the country and the increase in prices in the international market. Even after such drastic increases occurring in such a short span, the All Pakistan Sarafa Gems and Jewellers Association claims that prices are still below cost as local gold is cheaper by Rs3,000 per tola as compared to prices in Dubai.
The consistent increase of domestic prices hints at the fact that economic indicators of the country are not all well. The major contributing factor remains the low confidence of the masses despite attempts made by the incumbent finance ministry to reassure investors that the economy is being kept under control. Liquidity crunch, rupee devaluation and shortage of dollars have urged people to resort to investing in the safe-haven metal, and frenzy-buying has led to an unprecedented rise in the domestic price of gold. This will further add to Pakistan’s economic woes as serious investors have already taken out their money from the banks to invest in gold, despite a historic high interest rate. Many others are also considering the same. The skyrocketing price has also started to affect middle-class weddings as it is near impossible for families to gift gold ornaments, with sales stagnating this time around.
Officials have been presented with a difficult dilemma during a serious economic crunch. As of yet, despite rising interest rate, not much has been done to offset prices or provide alternative incentives. Maybe it is time to think outside of the box and opt for confidence building measures. Mere statements will no longer cut it.
Published in The Express Tribune, December 20th, 2022.
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