Gold rate surges to all-time high of Rs115,000 per tola

KARACHI: Gold rate shot up to an all-time high of Rs115,000 per tola on Wednesday as weakening rupee made investors to flock on the safe asset, though needy buyers remained conspicuous in absence, dealers said on Wednesday.

Gold rate in the local market increased Rs1,500 per tola compared to the previous day, according to All Sindh Saraf Jewellers Association (ASSJA). Ten gram gold price was raised by Rs1,286 to Rs98,594. In the international market gold rates increased $31 to $1,856 per ounce.

Haroon Chand, president of ASSJA told The News primarily investors are investing in gold as rupee is weakening.

“Investors are buying gold. Local purchase is almost nothing. There is no purchasing power,” Chand said. “Individuals are not coming to buy, they are coming to sell.”

Rupee lost more than 7 percent against the US dollar year-to-date as uncertainty over foreign inflows – including IMF’s stalled loan program – exerted pressure in the foreign exchange market. Rupee is expected to trade around 171 / dollar next year, according to Fitch Solutions.

In one year, gold prices rose 100 percent. Gold price happened to be Rs82,000 / tola in March when the lockdown was imposed following the coronavirus outbreak. There has been a significant Rs30,000 jump in gold price in couple of months.

Local jewelers said gold price in the local market was still Rs3,000 per tola lower than that in Dubai market.

Chand said tensions between China-India and China-USA had a role behind an increase in the gold prices globally.

“I think the market will further go up and touch $1,900 per ounce in a few days,” he said. “Besides geopolitical tensions, Covid-19’s grip was not lost. Corona has gripped the economy, bank interest rates are down and people are converting their wealth in gold.”

Chand said people are losing jobs and selling their house stuffs. Middle and lower class is the worst sufferer. Impact of coronavirus to the economy will continue till three years, he said.

Ahsan Mehanti, CEO of Arif Habib Commodities said global economic uncertainty and geopolitical uncertainty are the major reasons behind gold price increase.

“Dollar is weak in the international market, so investors are going behind gold.”

Mehanti said continuous weakening of rupee affected the local market, as recovery in rupee is not significant. “There was a 20 percent increase in the international (gold) prices while 10 percent impact came due to rupee weakening over the period.”

Goldsmith Shafi Khan said prices in local market went up because of higher rates in the international market.

“First barrier was $1,850, which has been crossed while the new target is $2,000 per ounce. If the current trend in the prices continues, $2,000 per ounce will be reached,” he said. “However, prices will not stay higher for the longer period, as they are not natural. This market will not sustain at this level.”

Khan further said local trade slowed down due to increase in prices.

“It was already a slow market, which has further gone down,” he added. “Trade activity has slowed down to five to 10 percent only. Around 80 percent workers are not finding work.”