During May 2018 Gold was traded at US$1,300/ounce in international market and within a period of just two years it crossed US$ 1,700/ounce mark and has succeeded in reaching at the level of US$ 1,788/ounce. This accounts to a significant increase of more than 37% in last two years.
With continuous increase of price of Gold in international market and that coupled with devaluation of Pakistani Rupee, prices of Gold reached an all-time high level in Pakistan. Local Gold Market here in Karachi traded 24K Gold at more the 100,000/tola and currently it’s traded within the range of 95,000 to 100,000/tola.
This drastic increase in prices, bearish trend among world economies and recently pandemic situation due to Corona for last three months has resulted in loss of buying power among customers. This slump can also be witnessed by that fact that local Gold market is trading Gold at much lower price from the one that is being traded in international market. It’s almost Rs6,000 less to what is being traded elsewhere. Only business going on in local Gold markets is customers selling their gold jewelries and ornaments to make their ends meet.
Haji Haroon Rahseed Chand President, All Sindh Sarafa Jewellers Association (ASSJA) said; “in rural areas majority of population earn on daily wages and due this Corona pandemic they are out work and resources to make their end meet. Most of them are selling their Gold ornaments to make their end meet. Although this hasn’t resulted in any shortage of funds for buyers but it has definitely given a loss to sellers as they are getting much less value for their Gold”.
He further said; “not only in Pakistan but also in courtiers like UAE and its neighboring countries, Gold is being traded at much lesser price when compared to price of international market. In Pakistan and also in Dubai, Gold is traded at Rs 6,000 lesser price as compared to the one at international market. One of the main reason for this lesser price lesser public buying due to various factors, but on the other side life is getting more difficult for buyers with increasing prices and that too in form of cash. Handling large cash amounts weren’t easy before now due to more and more regulations it’s getting more hectic”.
Replying to a question on trading of Gold via online payments, cheques, pay-orders, bank-drafts and Bonds he said; “Pakistani market is not ready for these payment methods. Some of the fears for not going this way are, with-holding tax from banks, bogus cheques, un-due taxes on electronic transactions, taxes on non-filers. Gold traders don’t that confidence in cheques and they only agree to deliver goods once they have received payment in their account. Pakistan Mercantile Exchange offers online and electronic payments for buying & selling Gold as commodity, but this is limited for investors only and not for actual Gold buyers. Future of online transactions is not very near and I am not sure what the outcome of online transactions would be as I do not have any data available right now”.
Haji Haroon Rahseed Chand said; “during current scenario, Gold is considered as safest investment, which can be witnessed by the fact that economies all over the world are falling apart and locally our currency is devaluing by every other day but even prices of Gold are soaring and we expect them to increase further in coming days. Today Gold is traded at US$1,724/ounce. This converts to Rs 96,000/tola and Rs 82,647/10 grams as selling price in Pakistan. I see this price go upto Rs 100,000 and I would like to stress my point again that during current situation there is no safe investment than investing in Gold.
On concluding note Haji Haroon said; “my forecast is that within next few years prices of Gold will reach within the range of US$ 2,000 ~ US$ 3,000 in international market and in local market it will reach upto Rs150,000/tola. Most of the financial experts have warned that due to corona pandemic economic activities won’t reach normal level and that will keep a pressure on major currencies all-over the world. Investors will be left with no option but to opt for Gold as safe investment”.
