An ounce of gold became $44 more expensive in the international market on Monday after the precious metal’s demand soured in China and other countries plagued by the coronavirus.
Gold was trading at $1,687 per ounce, a level last seen in February 2013, as it rose 2.6% from the previous day’s tally. Since we import gold and pay for it in dollars, the local market saw gold prices reach their highest level ever.
A tola of gold in Pakistan now costs Rs96,300 following an overnight increase of Rs2,000.
Since early February, the rate of yellow metal has surged 6% in the international market on the back of a growing demand, especially from China. This is because the outbreak of the coronavirus has caused panic across the world and disrupted economic activity in the world’s largest manufacturing powerhouse.
As reports of new cases emerged from other countries, investors moved away from equity markets and parked their capital in gold, which is considered a safe haven for investors.
The global uncertainty has dragged almost all equity markets in the region down 1% to 3%. The KSE-100 share index shed 1,100 points or 2.8% on Monday. However, Milan’s main index was worst hit, falling 4% after Italy witnessed Europe’s worst outbreak of the deadly virus.
Traders and analysts say the upward trend in gold prices is likely to persist for a while.
“The rates are hiking by every hour and it’s not likely that the situation will get better,” said All Sindh Saraf and Jewelers Association Chairperson Haroon Rasheed Chand. Gold is presently trading at its highest level in Pakistan, but in terms of value, he said the local rate is still below what you pay in global markets.
Pakistan Gems Jewelry Traders and Exporters Association’s Chairperson Akhtar Khan Tessori said the opening rates of Monday’s market were somewhere around Rs97,000 per tola. An increase of Rs2,000 in a day. He says the rates will cross Rs100,000 in just a matter of days.
Another bullion trader, Habibur Rehman, told SAMAA Digital that the retail markets have gone empty. “Even in England, I saw people literally deserting the markets as the rates started to soar,” he said.
Rehman also said that the markets are less likely to see a dip in gold prices as the demand remains high and the trend is likely to hold that way if the coronavirus continues to haunt markets.