Pakistan's gold market opened the week on a whopping note to hit a new high Monday as the rupee bled more value on the altar of the International Monetary Fund (IMF) so that Pakistan could finally win a long-denied loan to dodge an imminent economic disaster, dealers said.
According to All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of gold (24 carats) increased by Rs1,500 per tola and Rs1,286 per 10 grams to settle at Rs210,500 per tola and Rs180,470 per 10 grams, respectively.
The jewellers' body also said that local gold was “overcost” by Rs5,000 per tola in Pakistan, compared to the Dubai bullion market.
Dealers, who were already eyeing the 200,000+ per tola rate since the current price hike spree, cited record-breaking rupee devaluation and a steep decline in the foreign exchange reserves in the country as major factors contributing towards the massive price hike in the bullion market.
Investors were, however, purchasing only gold bars, not jewellery, which had not only reduced goldsmiths' profit margins but the labour force was also at the stake of losing jobs, as jewellery makers were moving towards other professions in absence of work, The News reported on Friday.
"There was a decline in purchasing power of the people as more people now use artificial jewellery," a goldsmith said, adding that the majority of the gold makers are also moving towards artificial jewellery.
International gold gained as the dollar softened as all eyes are set on central bank meetings this week, with the main focus on the US Federal Reserve.
Gold, which pays no interest, gains when interest rates are down as it cuts down the opportunity cost of owning the precious metal.