Wednesday May 22, 2024

Gold market awaits reopening amid rates uncertainty

By Shahid Shah
September 23, 2023

KARACHI: Gold market is still in limbo as negotiations continue over the reopening of bullion rates, which were suspended last week due to illegal trading activities, market sources said on Friday.

The future gold prices in the local market are expected to be closely aligned with international prices, with a margin of no more than $3 per tola (11.66 grams), according to insiders. “It will be kept higher by $2 to $3 than the international market,” said one goldsmith, who did not want to be named.

The bullion rates were supposed to be reinstated on Friday, but the process was delayed due to the illness of the market president, Al-Haj Haroon Rasheed Chand, who is also the head of the All Pakistan Gems and Jewellers Association (APGJA).

A spokesperson for the association said the gold market would likely reopen on Monday, resuming its vital role in Pakistan’s economy. The market was shut last week after gold prices jumped by 2.7 percent to Rs215,000 per tola (11.66 grams), defying a global decline.

Reports suggested that gold was allegedly being sold in Lahore at Rs222,000 per tola and in Peshawar at a staggering Rs230,200 per tola, figures significantly higher than the officially recognized rates.

The authorities detained some market participants on suspicion of creating artificial demand and supply gaps to manipulate the prices. Intelligence and law enforcement agencies have launched a major crackdown on the gold mafia and smugglers, who are accused of manipulating gold prices and evading taxes.

Just a few days ago, Chand, president of APGJA), expressed deep concern upon learning that certain individuals, described as speculators, were engaging in such activities. In response to these unauthorized trading activities, he issued a stern warning, urging those involved to refrain from illegal trade practices.

He cautioned that if such activities persisted, law enforcement agencies would take action, emphasizing that there would be severe consequences for those found violating the law. Successful negotiations have since occurred between industry representatives and law enforcement agencies in an effort to resolve this situation.

The industry remains vigilant and committed to addressing these concerns, as unauthorized trades have the potential to harm the entire gold industry within the country. Chand reaffirmed his commitment to combating unauthorized trading practices, even if it means facing personal hardship.

He also offered valuable advice to market participants, urging them to conduct gold trades exclusively with cash and rupees, as a means to promote transparency and adhere to local regulations within the gold market.

As the gold market prepares for a potential resumption of trading on Monday, industry stakeholders and investors are closely monitoring developments. The continued challenges highlight the importance of maintaining regulatory control and integrity within the gold market, an essential sector that plays a pivotal role in Pakistan's financial landscape.