Gold ends week at Rs78,600/tola; demand erosion spooks jewellers

KARACHI: Gold prices continued to move upwards in the local market on Saturday, touching an all-time high of Rs78,600/tola, amid rising global prices, dealers said.

All Sindh Saraf and Jewellers Association (ASSJA) announced an increase of Rs500 per tola on the last day of the week as gold traded at $1,400/ounce, up $6/ounce from the $1,394/ounce internationally.

Domestic rates peaked to Rs78,600/tola against Rs78,100/tola on Friday, while local rates of 10 gram gold increased by Rs429 reaching Rs67,387/10 grams, against Rs66,958/10 grams recorded during the previous day.

A jeweller said that due to an increase in the price of the precious commodity in the international market and a decline in rupee value, prices in the local market had surged, which had reduced the business by almost 50 percent in the last few years.

Muhammad Shafi Khan, a senior goldsmith in Karachi, said, “We have lost business by around 50 percent in the last few years.”

Value of rupee has decreased by 29.11 in fiscal year 2019. It dropped to Rs157.14/dollar in the open market on Saturday, as compared to Rs121.71 on July 1, 2018.

The 29.11 percent depreciation in rupee has resulted in an increase of 32 percent in the prices of gold in the local market.

During this period, gold rates surged 32 percent to Rs78,600/tola for 24 karat gold against Rs59,550/tola on July 2, 2018.

In the international market, gold prices increased by 12 percent during this period to $1,400/ounce from $1,249/ounce on July 2, 2018.

Khan said that looking at the international price hike and rupee depreciation, gold prices would have further gone up in the local market. However, due to a decline in the purchasing power in the country, prices remained lower by Rs3,000 per tola compared with the international market.

Eid days remained the peak days for business, a jeweller said. But following that, there was no business in the market. “People are rather selling their precious ornaments to ease their finances or to fulfil their needs,” Khan said.

All Sindh Saraf and Jewellers Association President Haroon Chand said higher prices in the international market and lower demand locally have halted the import of gold. “No one will import to make themselves losses,” he added.

Workers were the worst affected by the recession in the gold industry amid higher prices and lower demand, as they worked on daily wages and got paid only against their work.

“Once, it was difficult to find a worker. Now, they (workers) are roaming for work, but we are unable to help them out,” a jeweller said.

He said that USAID had trained the local workers to improve their skills, which could have earned them better, but with low demand, work has become precious too. “Instead of getting work, the daily wagers are losing not only skills but wages due to low demand of gold jewellery,” the jeweller said.