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Saturday July 13, 2024

Gold hits all-time high as rupee stoops to record low

By Shahid Shah
January 27, 2023

KARACHI: Gold prices in the local market increased by Rs4,900 per tola on Thursday to reach a new all-time high in the country, following huge devaluation of the local currency.

According to All Sindh Saraf Jewellers Association, gold rates increased to Rs195,500 per tola, while 10-gram gold price also rose by Rs4,201 to Rs167,610.

“Due to the instability of the Pak rupee and a record decline in the foreign exchange reserves in the country, investors are already on the move towards the gold market,” a goldsmith said.

However, he added, investors were purchasing only raw gold bars, not jewellery, which had not only reduced their 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.

There was a decline in purchasing power of the people as more people now use artificial jewellery, the goldsmith said. “The majority of the gold makers are also moving towards artificial jewellery.”

Gold prices increased by 6.30 percent to Rs195,500 per tola, from Rs183,900 per tola on December 31, 2022.

In the international market, gold rates increased by $11 to $1,936 per ounce on Thursday. The rates jumped by 6.14 percent to $1,936 per ounce, from $1,824 on December 31.

One analyst said black marketing in the currency market and continuous devaluation of the rupee stood as major reasons behind a hike in gold prices.

“Gold prices are likely to increase further, as investors remained cautious of a record decline in the foreign exchange reserves,” he envisaged.

A senior goldsmith Shafi Khan said a sudden increase in the dollar rate in the interbank market also affected the gold market. International pressure was also there as People’s Bank of China had increased its gold reserves beyond 2,000 tonnes, he added.

“Here is a crowd following, people are running in one direction after the depreciation of the Pak rupee. Sometimes they run behind property, stocks, and now they are running behind gold. There is huge demand created by such people,” khan said. However, he lamented that the jewellery industry was shrinking as the industry couldn’t run on just raw gold demand.

“In past, jewellery work continued in day and night shifts but now even day shifts are passing without work and several people are not opening their workshops.” Silver was affected by an increase in the international market, however, it was not in higher demand in the Pakistan, the goldsmith stated.

Silver rates increased by Rs50 to Rs2,150 per tola. The price of 10-gram silver also rose to Rs1,843.28.

The local jewellers said that gold rates remained lower by Rs1,500 per tola as compared with the rates in Dubai’s gold market.