Gold prices go up, profits come down

LAHORE: Recent sharp rises in the price of gold in the international market have hurt local jewellers, with some reporting a 50 percent drop in customers despite the approach of wedding season.

The price of 24-karat gold on Saturday was Rs40,600 per tola, up from Rs39,700 per tola. This is the third time the price has gone up in one week.

For jeweller Muhammad Ahmed, the sudden increase means a loss of some Rs16,000 on a big wedding order. “A couple of days ago I booked an order at Rs39,700 per tola for around 20 tolas,” he said.

With the price rise, he now must buy gold at around Rs 40,550 per tola. “I am losing around Rs 800 on each tola and my loss is around Rs16,000,” he said.

Ahmed said his customer was unsympathetic. “I asked him to pay more but he refused, saying he was not responsible for fluctuations in the international market,” he said.

Jeweller Muhammad Shahbaz said last year he sold around 200-220 tolas a month, making a profit of around Rs 50,000. But now he sells 110-120 tolas a month, netting a profit of Rs 40,000 per month. “If we look at the inflation then my income has decreased more than Rs 10,000 per month,” he said.

Several customers said they were thinking of buying artificial gold as the real thing was too expensive. “I gifted 10 tolas of gold to my oldest daughter three years ago. I cannot afford to give the same quantity to my youngest daughter,” said customer Tariq Mehmood.

Published in The Express Tribune, September 19^th, 2010.