Gold hits record high amid global turbulence

KARACHI:

Gold reached a new all-time high at Rs241,100 per tola (11.66 grams) in Pakistan on Thursday, marking a historic moment in line with the global record-breaking trend. Meanwhile, the rupee remained stable near its recent five-and-a-half-month high at Rs277.83 against the US dollar in the interbank market throughout the day.

In the global market, the precious metal surpassed $2,300 per ounce (31.10 grams) for the first time in history, briefly touching a new record high of $2,302 during the day. This surge was attributed to expectations that the US central bank would cut its benchmark interest rate in June 2024. However, the price later receded below this historical high, indicating the possibility of profit-taking in Pakistan as well.

The All Pakistan Sarafa Gems and Jewellers Association (APSGJA) reported a Rs2,200 increase per tola in the price of gold, settling at Rs214,100 in the country on the same day. According to data from the association, the commodity has surged by a net Rs25,400 per tola since March 1, 2024.

Speaking to The Express Tribune, Adnan Agar, Director of Interactive Commodities, highlighted that gold had experienced a robust rally in the global market, rising by 10% or $230 in the past three weeks to reach $2,302 per ounce. He mentioned that the Pakistani market followed suit. 

He suggested that the future trajectory of gold would be influenced by the upcoming US job data. He indicated that if new job opportunities in the US remained stagnant, the metal could be subject to profit selling. However, he also pointed out the possibility of the commodity surpassing $2,400 per ounce if robust job creation data were reported.

Agar noted that the short to medium-term trend for gold in the international market was downward, cautioning that the metal’s rapid increase without corrections indicated a potential bubble that might burst soon. He suggested that the price might correct to $2,100 per ounce in the near future.

“The correction may take a V-shaped trajectory, potentially descending as rapidly as it ascended,” he remarked. “These movements would likely be mirrored in the Pakistani markets as well.”

He highlighted that robust US job data would likely prompt the Federal Reserve and other global central banks to maintain higher interest rates.

Addressing the controversy surrounding the all-time high price of gold, the APSGJA claimed that gold had reached Rs242,700 per tola in Pakistan in September 2023. However, fact-checking revealed that the association had never reported this price throughout September 2023 or at any other time in history. The association’s public data showed that gold had hit a record high of Rs240,000 per tola in May 2023.

He recalled that gold had “unofficially” reached a record high somewhere between Rs260,000-265,000 per tola in September 2023 when the local currency had plummeted to an all-time low of Rs330-340 against the US dollar in the open market.

Rupee stabilises

Regarding the stability of the rupee, it remained unchanged at Rs277.93/$, rising by Rs0.01 on a day-to-day basis on Thursday. The currency had consolidated near its five-and-a-half-month high for the past two consecutive working days, reducing cumulatively by Rs0.09 in two days as it approached the psychological level of Rs277/$. The rupee had gained 10.53% or Rs29.26 in the past six-and-a-half months, reaching Rs277.84/$ on Tuesday from its record low closing at Rs307.10/$ in the first week of September 2023.
In the open market, the domestic currency further strengthened by Rs0.21 on a day-to-day basis, closing at Rs279.77/$ on the same day. This uptrend in the open market was attributed to the central bank’s extension of the deadline for dealers to import dollars in cash until June 30, 2024, from December 2023 earlier this week.

Published in The Express Tribune, April 5^th, 2024.

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