After witnessing a substantial decline, gold prices in the local market rebounded, witnessing the biggest jump in a week, and touched Rs40,714, up Rs814 per 10 grams, traders said.
This recovery of gold prices is significant because the yellow metal shed over 7.08% in the outgoing week. Similarly, yellow metal prices also jumped by Rs950 per tola to reach Rs47,500 per tola.
All Sindh Sarafa Jewellers Association President Haji Haroon Chand said that the increase in international gold prices was the reason why local gold prices jumped on Saturday in Pakistan.
Gold prices jumped to $1,230 per ounce on Saturday after regaining the psychological mark of $1,200 per ounce on Friday. Gold prices in the international market have declined, unprecedentedly, by 25% in the last three months to touch lowest levels in the last three years.
In the last one month, one tola price has tumbled by Rs6,100, he added.
Traders at the biggest gold market in Karachi said that local gold demand was low because people were waiting on international gold prices to settle down. Despite the wedding season, people are not buying gold mainly because of the recent slump in gold prices, Chand added.
He said that the US dollar was gaining strength against other major currencies, whereas China – the second biggest gold buyer in the world – that used to invest in gold heavily has shifted its focus to currency.
Gold prices have seen sharp fluctuations in the local market in the last one month mainly because of international gold prices that have declined considerably.
Gold has shed around 15% of its value in the US since last week when Federal Reserve Chairman Ben Bernanke laid out a roadmap to scale back the central bank’s $85-billion monthly impetus through bond purchases. The expectations of improvement in the largest economy of the world have proved deadly for the vulnerable gold prices as investors started shifting investments to stocks.
Gold tends to gain from loose monetary policy as it is considered a hedge against inflation. It also gains strength from the weakness of the dollar. International gold prices tumbled with the gain in US dollar, which has gained strength over the last few weeks against other leading currencies of the world.
Published in The Express Tribune, June 30th, 2013.
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