Gold hits new peak of Rs73,400/tola on weak rupee

KARACHI: Domestic gold prices hit a new peak of Rs73,400/tola following firm overseas markets, triggering high purchases from consumers in post Ramazan weddings’ months, traders said on Thursday.

They said rupee depreciation and high international gold prices were reasons behind the recent increase in gold rates. Gold prices increased six percent in last three months.

The rupee-dollar parity plays an important role in determining the landed cost of the dollar-quoted yellow metal. Rupee fell to a record high on Thursday against the dollar.

All Sindh Sarafa Association President Haroon Chand told The News that continuously declining rates of rupee, surging dollar rates and an increase in the international gold prices were the reasons behind the price increase.

“Prices are still weak in the local market because of soft buying this high demand season,” he said.

On Thursday, 10 gram gold price was recorded at Rs62,885 up Rs600 from the previous close. Traders said the rates kept increasing throughout the day, while prices were to be closed later in the evening.

He said the government has proposed imposition of sales tax on gold, which would further affect the prices.

Muhammad Shafi Khan, a senior goldsmith of Karachi, said the rupee had remained under control before Eid, which depreciated further after the holiday season, resulting in an increase in the prices. Besides, the local market was also impacted by the increase of the commodity in the international market.

Khan insisted that the currency depreciation was the major cause behind the surging gold prices.

He said imports were halted, as old gold was rolling in the market lower by Rs2,500 to Rs3,000 per tola than the international prices.

“Demand of gold is lower in the local market as compared to its sale by individuals. People are buying occasionally for marriages etc. Our buyers are silent,” he said. “There is no need to import when more gold is available than demand.”

Shafi Khan said that lower purchasing power, rising poverty, and rising needs had compelled people to sell their ornaments. “They maybe need money for education, marriages or just to fulfil their other necessities,” he added.

Due to a decline in the demand of gold amid decreasing purchasing power and increasing prices of this precious commodity, there has been a considerable decline in the commercial activities of the market.

“In last one year, business has declined a lot. In a few years, we have lost more than 50 percent of the business,” he said, holding the erosion of the public’s buying power as the reason behind the declining business.

He said workers in the gold market were also affected by the decline in the business, as they were not finding work, and hence moving towards other professions.

“Eid season used to be a prime season for business and workers around five years back,” Khan said. “But now, there is no work!”