Gold prices are directly affected by ‘games’ that a certain international lobby plays in order to deceive investors in developing economies like India and Pakistan. PHOTO: FILE
Gold prices are going to start surging by March next year, All Sindh Saraf and Jewellers Association (ASSJA) President Rasheed Chand said on Tuesday.
Speaking to The Express Tribune, Chand said the ongoing downturn in gold prices is a ‘temporary phenomenon’, which will be over before the end of the current fiscal year in June 2014.
The price of 10 grams of gold was Rs43,714 on December 9 as opposed to Rs45,428 on November 15. In the international market, the gold price has decreased from roughly $1,290 per ounce to $1,240 per ounce over the same period.
“As long as US economic data shows improvement, the probability of sooner-than-later tapering becomes more real, which should keep downward pressure on gold prices,” analysts at Next Capital, a Karachi-based commodities broker, said in a research note.
Theoretically, the price of gold is inversely proportional to the dollar’s worth, which means its value declines if the dollar gains strength.
Gold prices started surging internationally as soon as the US Federal Reserve resorted to quantitative easing in the aftermath of the 2008 global recession. Injecting liquidity into the market by purchasing $85 billion worth of government bonds and financial assets every month has kept interest rates at a low level.
As a consequence of low interest rates in the US economy, investments in gold have soared globally. The price of gold has increased over 60% since 2008 when it stood at $840 an ounce.
The fact that gold prices dropped to a three-year low in June as soon as the US Federal Reserve hinted that quantitative easing could be scaled back as early as September proves that the likelihood of increasing interest rates quickly leads to divestments from the precious metal.
“Gold prices edged higher in range-bound trade on Monday, as traders looked ahead to speeches from a number of Federal Reserve officials later in the day for further indications of the future course of US monetary policy,” said the research note.
However, according to a Wall Street Journal report published on Tuesday, financial powerhouse Goldman Sachs doesn’t expect the US Fed to start raising interest rates until 2016.
Analysts believe this is likely to put an end to the short-term volatility in gold prices.
According to the ASSJA president, gold prices in the country are directly affected by ‘games’ that a certain international lobby plays in order to deceive innocent investors in developing economies like India and Pakistan.
“Although the role of Pakistanis’ diminishing purchasing power cannot be ignored, the fact remains that this international lobby targets gold, currency and stock markets one after another to rip off unsuspecting investors,” Chand added.
However, he said gold prices in Pakistan are expected to undergo a swift increase in the first half of calendar year 2014.
Published in The Express Tribune, December 11th, 2013.
Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.
COMMENTS (3)
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ
1714024018-0/ModiLara-(1)1714024018-0-270x192.webp)
Indeed a nice marketing effort to prompt purcahse of gold products before the end of next fiscal year...
Famous last words: "he said gold prices in Pakistan are expected to undergo a swift increase in the first half of calendar year 2014."
...Gold is the Real money, it always has been, for centuries. Everything else is just Currency. The days of the strongest Currency i.e US$ is coming to an end.
regards,