Gold traders resume internal deals as market awaits reopening

KARACHI: The gold market has yet to resume official trading after a recent crackdown on illegal trade, but sources said on Monday internal transactions are taking place at lower rates.

A goldsmith, who spoke on condition of anonymity, said some transactions were taking place within the market at around Rs210,000 per tola, down from as high as Rs230,200 in some cities last week.

The atmosphere within the market has been tense due to recent events, particularly law enforcement actions targeting illicit gold trading activities. Yet, the goldsmith indicated that the sense of panic had somewhat abated thanks to the Pakistani rupee's appreciation and a decline in the international gold market. “As a result, it is expected that when the bullion rates are finally opened, they will likely reflect this new, more stabilised reality,” the goldsmith said.

However, when bullion rates will reopen remains uncertain as market leaders negotiate to establish a pricing mechanism that prevents speculation. Market insiders said that future gold prices in the local market would be closely aligned with international prices. There is an anticipation that local gold prices will be maintained within a margin of $3 per tola above international rates, according to reports from inside sources. One goldsmith even suggested that the differential might be slightly narrower, ranging from $2 to $3 above the international market rates.

Originally, the resumption of bullion rates was expected to take place last week. However, the process has encountered delays, and it isnow anticipated that the gold market will reopen sometime this week.

The recent turmoil in the gold market had been driven by reports of unauthorised trading activities. All Pakistan Gems and Jewellers Association President Al-Haj Haroon Rasheed Chand had expressed deep concern about individuals, described as speculators, engaging in gold transactions at prices significantly higher than officially recognised rates. In Lahore, gold was allegedly being sold at Rs222,000 per tola, while in Peshawar, transactions were reported at a staggering Rs230,200 per tola.

In response to these unauthorised trading activities, Chand had issued stern warnings, urging those involved to cease such practices. He cautioned that if such activities persisted, law enforcement agencies would intervene. He underlined that severe consequences awaited those found in violation of the law.

Successful negotiations have since taken place between industry representatives and law enforcement agencies in an effort to resolve the situation. The industry remains vigilant and committed to addressing these concerns, as unauthorised trades could potentially harm the entire gold industry within the country.