Gold prices plunge as market adopts interbank trading

KARACHI: Gold prices fell sharply on Thursday, as the market switched to a new pricing formula based on interbank trading, aiming to align with international standards and curb speculative practices.

According to data from the All Sindh Saraf Jewellers Association, gold rates in the local market moved down to Rs197,200/tola, reflecting a substantial decline from the previous rates. The price of 10 grams of gold also registered a notable decrease, falling by Rs6,684 to reach Rs169,070.

Simultaneously, gold rates in the international market increased by $13, settling at $1,885/ounce. However, silver rates remained stable in the local market, with no change reported. The rates for silver held steady at Rs2,500/tola, while 10 gram silver rates also maintained the same value, standing at Rs2,143.34.

Traders said the shift to interbank trading in the gold market represents a significant development, introducing a new formula for pricing. Under this formula, gold rates in the local market are set to be higher by around $5 with a certain percentage per tola compared to the international rates.

These rates are then converted into Dirham rates and subsequently into Pakistani rupees. This transition aims to align local gold pricing more closely with international standards. "The move towards interbank trading is a pivotal step in achieving pricing uniformity, said Al-Haj Haroon Rasheed Chand, President of the All Pakistan Gems and Jewellers Association. "The new formula aims to mitigate discrepancies and speculative pricing practices that may have influenced the local gold market in the past."

Chand emphasised that teh new approach seeks to ensure fair and consistent pricing in the local gold market. He noted that speculators and black marketeers had been selling gold at significantly higher rates, creating disparities in pricing.

"The transition to an interbank-based system aims to address these concerns and provide more transparent and competitive pricing for consumers and traders." Chand said the drop in gold prices was a positive development, and with most of the local gold traded in the market, it was essential to ensure that these pricing changes were effectively enforced.

As the gold market adjusts to this new pricing framework, industry stakeholders and market participants will closely monitor its impact on local gold rates. The shift towards interbank trading is seen as a positive step in enhancing transparency and stability in the local gold market.