The price of gold surpassed Rs200,000 per tola (11.66 grams) for the first time in the history of Pakistan after the rupee witnessed a freefall against the US dollar on Friday.
The jump in bullion price, however, made jewellers unhappy, as genuine buyers have quit the market and gamblers have jumped in.
Speaking to The Express Tribune, local gold pricing body Head Haji Haroon Chand Rashid said, “Speculators are minting money in the name of ‘investment’. They make money and quit, leaving genuine investors baffled.”
The price of the precious metal soared Rs7,000 per tola to Rs202,500 in Pakistan. The latest rise in the price is seen following the rupee recording a fresh drop of 2.73%, or Rs7.17, to an all-time low at Rs262.60 against the US dollar in interbank market on Friday.
“The rupee-dollar exchange rate impacts bullion pricing in Pakistan, as gold remains a global commodity,” said Rashid.
These days, however, Pakistan is not meeting its demand through imports.
“The gold available within the country is in circulation in the market these days. The price-hike is unjustified,” he said, adding that, “I will record my protest tomorrow (Saturday).
Over a period of time, the constant rate-hike has caused many jewellers and workshops to shut down, leaving a number of workers jobless.
“Despite being peak wedding season, there are hardly any jewellery buyers visiting the outlets. Currently, only 10-tola TT bars are in demand. Instead of crafting new designs to cater to bridal homes, goldsmiths are now only spending time melting old jewellery to convert them into gold bars as demanded by investors,” lamented Rashid.
From the time that the US dollars started disappearing from the open market, investors began turning towards gold bars as safe havens for their funds.
“But now, gamblers are playing the gold markets, and they are the reason behind this consistent hike,” he said.
To recall, gold emerged as the lead asset in terms of return on investment (ROI) in Pakistan in 2022. It offered a 41% ROI (profit) in the year.
A global report suggested that between July and September 2022, the demand for gold surged by 43% to 13 tonnes gold in Pakistan.
The All-Pakistan Sarafa Gems and Jewellers Association (APSGJA) reported a rise in the price of gold despite the rate of commodity dropping by $6 per ounce (31.10 gram) to $1,930 in the global markets.
AA Gold Commodities Director Adnan Agar said, “Considering the crisis surrounding the country’s foreign exchange reserves, going forward, the rupee may maintain a downward trend and gold upward.
The global gold market, however, is a little direction less amid reporting of different data set by the US like inflation reading, revision in key policy rate, and unemployment rate.
Gold may drop by $50-60 per ounce this week ahead of the Fed meeting to announce the new key policy rate on Wednesday (Thursday in Pakistan). The bank is expected to increase the rate by 25-50 basis points.
“The data set will give direction to gold in the world markets. In any case, gold will move in the range of $1,850-2,000 per ounce over the next two-week,” said Agar.
The US economy, he said, has started recovering from the global economic crisis and a further improvement (to be suggested by data sets) will direct the global markets accordingly.
The development in global markets will also continue to give cues to about the domestic billion market.
Agar explained that for the domestic gold pricing body, the data-set used to determine the bullion price comprised of taking into consideration the commodity price in the global market, the rupee-dollar exchange rate, and demand and supply of the precious metal in the local markets.
Published in The Express Tribune, January 28th, 2023.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ