Gold market faces ‘artificial shortage’ amid high prices

Price touches new all-time high at Rs188,600 per tola

KARACHI:

After the US dollar crisis, the gold market is facing an artificial shortage of the metal as a majority of outlets are demanding exorbitantly high prices compared to the official rate that is announced every day.

Gold price has increased by Rs900 to a new all-time high at Rs188,600 per tola (11.66 grams), announced the All Pakistan Sarafa Gems and Jewellers Association (APSGJA) on Wednesday.

An industry source reported that the precious metal was not available at the official price, adding that the outlets were demanding Rs210,000 to Rs215,000 per tola.

A majority of the buyers comprise gold investors these days. Earlier, they were parking their savings in the US dollar to avoid the impact of rupee devaluation at a time of high inflation.

They moved to the bullion market following dollar shortfall in the open currency market. Illegal traders were selling the dollar for Rs250-260 in the black market compared to Rs227 in the inter-bank market.

Pakistani currency inched down by only one paisa to Rs226.95 against the greenback in the inter-bank market on Wednesday.

Gold has continued to break all-time high records over the past two weeks. It has emerged as the best asset in terms of return on investment, which was 41% in the previous calendar year.

The association has announced a new all-time high price after the metal rate increased by $29 to $1,862 per ounce (31.10 grams) in the world market.

AA Gold Commodity Director Adnan Agar said that a low trade volume had supported gold price in the international market during the recent holiday season.

Gold will take cue from the upcoming release of minutes of US Fed’s previous meeting and fresh jobs data. “Gold stands negative in the short run. It may return to $1,800-1,810 per ounce in the next one to two weeks,” he said.

The precious metal may, however, continue to rise in Pakistan considering that investors are unable to find US dollar and other major foreign currencies for parking their savings.

Published in The Express Tribune, January 5^th, 2023.

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