Gold prices rise two percent on high demand

KARACHI: Gold (24-karat) prices have risen two percent to a three-month high of Rs48,950/tola (11.66 grams), taking cues from the surge in demand of the precious metal internationally, experts said on Saturday.
Haroon Rasheed Chand, president of All Sindh Saraf and Jewellers Association said the surge in local gold prices was in line with the world markets.
“Price of bullion at London market rebounded by $23/ounce to $1,280/ounce at opening on Saturday...the world markets recorded recovery in the outgoing year,” he said.
Gold prices are testing high levels as investors sought refuge from volatility in the wider markets, with a slide in crude prices to their lowest in nearly six years fuelling turbulence in stock and currencies markets.
“Gold has been leading the move higher so far in 2015 and the rest of the precious metals have mostly been followers,” Swiss global financial services UBS said in a recent note.
Adnan Agar, head of trading desk at Arif Habib Commodities said economic decisions taken by Switzerland and Russia to come out of deepening financial crisis created demand for gold.
He said Switzerland has removed cap on appreciation of its currency (franc) against Euro.
The decision invited lucrative buying in bullion.
Moreover, Russia sold US dollars in international markets and converted a part of its reserves into gold.
The county did so for two reasons: firstly, it needed cash to run the economy under the US sanctions.
Secondly, Russia was selling dollar at the world markets to stop upward movement in the dollar and/or devalue it.
The European Central Bank has prepared a new plan to inject money into 28-nation European Union to support and revive the weakening economies of the bloc.
In the new stimulus plan, the central bank has addressed the concerns raised by Germany, which is against the plan. The gold had maintained upward trend from 2009 to 2012 when US introduced four similar stimulus programs to support the then weak economy.
US winded up the last program on November 1, 2014 after its economy exhibited strong signs of recovery i.e. decline in its rate of unemployment and inflation.
Chand said gold recovered after oil traders relocated their investment into the precious yellow metal.
“Traders have become sick of downward trend in oil, which has plunged to fiver-year low of $50/barrel...the current buying in gold is seen from China,” he said.
Agar added that if gold breaches through the mark of $1,300/ounce next week then it may head to test the next technical barrier of $1,329/ounce in the international markets.