Gold falls Rs1,650/tola as weak dollar triggers panic sale

KARACHI: Gold prices on Saturday sharply fell 2.8 percent or Rs1,650 to Rs56,350 per tola as weak dollar brought the precious metal’s rate down to almost all-time single day low.

Gold was trading at Rs58,000/tola, equal to 12 grams, on Friday and Rs59,200/tola on Thursday.

Traders said gold prices are shrinking as rupee started recovery against the US dollar.

Rupee recovered 1.9 percent against dollar in the open trade after making a rebound of 1.1 percent in the previous day as investors posed trust on political stability following the calm general elections.

A weaker dollar makes greenback-denominated gold cheaper for holders of other currencies.

Amjad Ali Khan, an ex-chief of Pakistan Mercantile Exchange (PMEX) said gold and dollar are inversely related.

“As rupee value is appreciating against dollar gold prices are coming down.”

Haji Haroon Rasheed Chand, chairman of All Sindh Sarafa Association termed the downward trend of gold prices as one of the rarest in the history he could recall.

“I couldn’t recount when the price went down to this level in a single day in the past,” Chand said.

In the last two days, gold price was down by Rs2,850/tola. Gold price of 10-gram came down to Rs48,311 on Saturday from Rs49,725 on Friday and Rs50,754 on Thursday.

Managing Director Ejaz Ali Shah of PMEX said the downward price trend in Pakistan has nothing to do with local factors.

“(Foreign) investors are seeing stability and they are offloading positions in gold,” Shah said.

He said Pakistan is a gold importer and the metal price is linked with international market. Global investors are expecting rise in interest rate and other investment avenues are becoming attractive and so they are shedding their gold assets.

International gold prices edged higher on Friday as the dollar slipped against major peers. Spot gold was up 0.2 percent at $1,224.40 an ounce. But, gold witnessed its third straight weekly decline.

Gold import surged 24.3 percent to $20.7 million during the last fiscal year of 2017/18, Pakistan Bureau of Statistics data showed. In terms of quantity, the increase was 15.7 percent. The country imported 509 kilogram of gold in FY2018 compared to 440 kilogram in the previous fiscal year.

Traders said bullion prices will take cue from international market trends and dollar movement in the days ahead.

Local market has a subdued demand as consumer buying power has waned, they added.

“Yet, demand in neighbouring India started rebounding due to approaching festivals,” a trader said, wishing not to be named. The world’s second biggest gold consumer India, accounting for more than 20 percent of global gold consumption, is ready for a surge in retail demand with festivals beginning in mid-August.

The trader didn’t attribute gold high price to smuggling across the border. But, he said gold exports to India took place via Dubai.

Import duty by the Indian government stimulated gold smuggling into the country. Smugglers brought 120 tons into the country with 700 to 800 tons of market.