Gold prices surge by Rs3,400/tola amplifying economic worries

KARACHI: Gold prices witnessed a substantial surge of Rs3,400/tola on Thursday, amplifying fear and panic about the precarious economic conditions. The All Sindh Saraf Jewellers Association announced that gold rates soared to a new high of Rs238,800/tola, adding further strain to an already uncertain financial landscape. The price of 10 grams of gold also experienced a notable increase, climbing by Rs2,915 to reach Rs205,590.

These local price hikes mirrored the global trend, as gold rates in the international market edged up by $7, reaching $1,945/ounce. Similarly, silver prices also underwent a moderate escalation, with rates inching up by Rs50 to settle at Rs2,900/tola. The cost of 10 gram silver also increased by Rs42.87 to close at Rs2,486.28.

Senior goldsmith Muhammad Shafi Khan weighed in on the prevailing market dynamics, noting the swift ascent in gold prices. Khan attributed this rapid rise to a combination of factors, including persistent inflation and the weakening of the Pakistani rupee.

He pointed out that the exchange rate had seen a substantial drop, with the dollar now trading at over Rs305 in the interbank market and surpassing Rs325 in the open market.

Khan highlighted the interconnectedness of the global gold market, noting that international gold rates had dipped below $1,900/ounce some time back, which have also gone up. However, he emphasised that the lion’s share of the impact on gold prices could be attributed to the ongoing currency depreciation, accounting for more than 85 percent of the fluctuation.

In a climate of uncertainty, Khan expressed scepticism about predicting future market movements.He lamented the lack of a robust policy to strengthen the rupee, which has left the market vulnerable to abrupt fluctuations.

Khan underscored the precarious state of the Pakistani currency, contrasting it with the relative strength of the neighbouring countries’ currencies. He elaborated on the potential benefits of a stronger rupee, citing increased buying power and greater overall economic stability as potential outcomes.

The dwindling demand for jewellery amidst rising gold prices has started affecting not only the industry but also workers who are now facing job losses. Khan noted a trend among top-tier workers in the gold sector shifting to other fields due to the limited opportunities in the industry.

The escalating gold prices have also hindered jewellery sales, with consumers now predominantly opting for gold biscuits over traditional jewellery pieces. Khan observed a growing trend of customers choosing to create simple jewellery from old gold rather than purchasing finished products due to the increasingly unaffordable prices.

As the nation grapples with a weakening currency and surging inflation, the concerns over the economy’s stability loom large. Continuous surge in gold prices has undoubtedly added another layer of complexity to an already challenging economic scenario.

In this atmosphere of uncertainty, the future trajectory of gold prices and its implications on the broader economic landscape remains a pressing concern for both industry insiders and the general public alike.