Gold price reached an all-time high of Rs100,400 in Pakistan on Tuesday, according to the All Sindh Saraf and Jewellers Association.
This is the first time that gold has shot above Rs100,000 in the country’s history. The precious metal saw an increase of Rs700 per tola in its price. The prices compiled by the ASSJA come with a lag of a day after changes in international prices. The bullion market is closed because of a nationwide lockdown, but the prices were calculated based on an increase in international gold price.
At the time of this report went online, gold futures were trading at $1,721 per ounce in the international market, their highest level in seven-and-a-half years. Gold futures have been on the rise recently, increasing by more than $200 per ounce since last week of March when they were trading at under $1,500.
Gold is correlated with dollar and other commodities, but dollar has weakened and alternates such as oil have also become cheaper because of a global slowdown. This is why investors are parking their money into gold, which is considered safe in uncertain times, say market experts. The market is weighing in the previous peak when gold hit $1,900 per ounce in 2011.
Gold price in the country has been hitting a new high very frequently this month. Since Pakistan imports gold and pays for it in dollar, the recent devaluation of the rupee also played a role. The Pakistani rupee was among the worst performing currencies in Asia earlier this month after it fell sharply against the dollar. A dollar is now worth Rs167 compared to Rs155, the level it has maintained till March.
The surge in local prices came despite a nationwide lockdown, which resulted in suspension of trade. No weddings are taking place and no one is buying gold, says Haroon Chand of ASSJA. Prices in Pakistan are Rs7,000 less than the Dubai rates. This means if you buy a tola of gold in Dubai, you will pay Rs107,400. The discount may reduce and prices increase when the markets open, Chand says.
The ASSJA says they will keep their shops closed until the lockdown is over, primarily because they deal in gold and need safety. The police are currently busy enforcing government policies with regard to Covid-19, he said.