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Gold roars to another record high in Pakistan

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  • Bullion extends record-making run as rupee devaluation worsens.
  • Gold in Pakistan overcost by Rs5,000 per tola vs Dubai market.
  • Dealers think gold to remain unstoppable in the near term. 

Gold prices in Pakistan roared to a new record high Monday, while the rupee continued to whimper versus the dollar after being thrown to the mercy of the unruly market forces to coax the International Monetary Fund (IMF) into unlocking a stalemated loan, dealers said.

According to All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of gold (24 carats) increased by Rs1,500 per tola and Rs1,286 per 10 grams to settle at Rs210,500 per tola and Rs180,470 per 10 grams, respectively.

The jewellers’ body also said that local gold was “overcost” by Rs5,000 per tola in Pakistan, compared to the Dubai bullion market. 

Dealers, who were already eyeing the 200,000+ per tola rate since the current price hike spree, cited record-breaking rupee devaluation and a steep decline in the foreign exchange reserves in the country as major factors contributing towards the massive price hike in the bullion market.

Investors were, however, purchasing only gold bars, not jewellery, which had not only reduced goldsmiths’ profit margins but the labour force was also at the stake of losing jobs, as jewellery makers were moving towards other professions in absence of work, The News reported on Friday.

“There was a decline in purchasing power of the people as more people now use artificial jewellery,” a goldsmith said, adding that the majority of the gold makers are also moving towards artificial jewellery.

Gold in the international market edged up on a weaker dollar, as investor attention moved to several central bank meetings this week for more clarity on their rate hike strategies, with the key focus on the US Federal Reserve.

Spot gold gained 0.1% to $1,928.36 per ounce.

“Gold is easing away from a nine-month high as the US dollar and yields stabilise, as markets eagerly await the Fed’s latest policy guidance,” said Han Tan, chief market analyst at Exinity.

The dollar was 0.2% lower, making bullion, which is priced in the US currency, more attractive for customers holding other currencies.

Market participants widely expect a 25-basis-point (bps) interest rate increase from the US central bank at the end of its two-day policy meeting on February 1.

Expectations are for a slowdown in Fed rate hikes after economic data showed signs of cooling U.S. inflation, while US consumer spending fell for a second-straight month in December, putting the economy on a lower growth path heading into 2023.

Gold, which pays no interest, tends to benefit when interest rates are low as it reduces the opportunity cost of holding bullion.

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Pakistani stocks are rising, and the KSE-100 breaks the 69,000 barrier.

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The benchmark KSE-100 Index increased 1.76 percent on Monday, passing beyond the 69,000 barrier for the first time in its history. This maintained Pakistani stock market’s record-breaking run, as investors remained upbeat about potential rate cuts by the central bank.

The most recent advances also follow Prime Minister Shehbaz Sharif’s iftar dinner given by Saudi Crown Prince Mohammed bin Salman in Makkah, at a time when Riyadh is anticipated to announce an approximately $1 billion investment in Reko Diq, one of the world’s greatest reserves of copper and gold.

After reaching a high of 69,720.03, the KSE-100 Index concluded at 69,619.98 with a net gain of 1,203.20 points by the time trading was closed for the day. This was due to international investors, both individual and institutional, making purchases.

The meeting between Shehbaz and the Saudi crown prince, also referred to as MBS, may open doors for investment in a variety of industries, including mining, energy, and agriculture.

With record-high energy and interest rates driving up the cost of conducting business to an unaffordable level, investors are clamoring for foreign investment to prop up the economy.

Any improvement in this area would not only contribute to the rupee’s appreciation but also increase the value of cheap equities due to the anticipated purchasing frenzy, as buyers will not pass up the chance to purchase at the reduced prices.

However, there is a big question mark over the heightened expectations that the State Bank of Pakistan will begin reducing interest rates following the consumer price index (CPI) showing a steady fall in inflation over the past three months, particularly the greater than anticipated decline in March.

The reason is that, given Islamabad’s desperation to secure another package from the Washington-based lender, there is an impending hike in gasoline costs in addition to power and gas charges. This move will further sustain the inflationary pressure under the IMF criteria.

Meanwhile, the most recent US data has reduced expectations for potential rate reduction by the Federal Reserve, which is driving up the price of gold as speculative purchasing occurs.

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The price of gold is still rising in Pakistan.

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24 carat gold’s per tola pricing increased by Rs 600 on Monday, when it was sold for Rs 245,700 as opposed to Rs 245,100 the day before.

Ten grams of 24 carat gold cost Rs 514 more than the selling price of Rs 210,648; ten grams of 22 carat gold cost Rs 193,094 instead of Rs 192,622, according to the All Sindh Sarafa Jewellers Association.

Silver prices per tola and per ten grams stayed at Rs 2,650 and Rs 2271.94, respectively.

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According to the Association, the price of gold went up $5 to $2,355 on the global market from $2,350.

24 carat gold saw a rise in prices per tola on April 6 of Rs 4,900. It was sold on Saturday for Rs 245,100 as opposed to Rs 240,200 the day before.

The price of 10 grams of 24 carat gold went up by Rs4,200, and it was sold for Rs210,134 as opposed to Rs205,932. The price of 10 grams of 22 carat gold went up to Rs192,622 from Rs 188,772, according to the All Sindh Sarafa Jewellers Association.

Silver prices per tola and per ten grams stayed at Rs 2,650 and Rs 2271.94, respectively.

According to the Association, the price of gold went up $44 to $2,350 on the global market from $2,306.

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PIA privatization: “Investors from Saudi Arabia and Qatar are briefed by Pakistan.”

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According to information provided, investors in the aviation industry in Qatar, Abu Dhabi, and Saudi Arabia were approached and given a briefing on the privatization of PIA.

According to additional sources, investors received information about “profitable” investments in the international lines operated by FIA and PIA.

Since National Airline’s debts and losses were transferred to the withholding firm prior to privatization, all of them have been paid off.

According to the sources, every obstacle to the PIA’s privatization has been removed.

It is important to note that, as the government moves on with its privatization plan, up to three Gulf nations—the United Arab Emirates, Saudi Arabia, and Qatar—have expressed interest in purchasing the financially troubled Pakistan International Airlines (PIA), according to sources.

Previously, purchasers were asked to submit proposals by May 3 for the privatization of Pakistan International Airlines (PIA).

The Pakistani government intends to sell 51 percent of the national flag carrier’s shares; the remaining 49 percent will be owned by the government. The government’s goal is to privatize solely the PIA’s aviation department.

According to the officials, the business that purchases the 51 percent of the shares would continue to hold administrative authority over PIA.

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