A tola of gold has become Rs13,000 cheaper in four days following a sudden drop in international prices of the yellow metal.
It now costs Rs119,000 to buy one tola of gold as prices dropped by another Rs1,000 on Thursday, according to the All Sindh Sarafa and Jewelers Association, a representative body of gold traders in the province.
The prices calculated by ASSJA come with lag of a day and are based on prices in the international bullion market, which has witnessed one of the most volatile trading session recently. Gold’s per ounce price decreased by $129 in the international market on Tuesday, marking the biggest one-day decline in seven years for the precious metal. However, they bounced back the next day and has been trading in the range of $1880 to $1960 per ounce since then.
The gold price touched a new high of $2,063 on August 6, but an announcement made by Russian President Vladamir Putin that Russia has developed an effective coronavirus vaccine has significantly effected gold’s price, which even took a dip to $1,867 on Wednesday as gold apparently lost the ‘safe haven’ appeal for investors. Correspondingly, a tola of gold reached an all-time high of Rs132,000 on August 8 in Pakistan. As international prices decreased, local prices followed suit to reach their present level.
HG Markets head of business development Rashid Ali says further developments of a COVID-19 vaccine may turn the situation more bearish for gold as it tends to lose safe haven appeal as economic distress reduces. Arif Habib Commodities Managing Director and CEO Ahsan Mehanti says apart from news of the vaccine, the dollar has strengthened, which has also contributed to the downward movement of the price of gold. He said that dollar and gold values move against each other and when the dollar weakens, investors move towards gold and when the dollar strengthens, investors move towards equities.
The Russian vaccine news and stronger dollar triggered a big slump in an otherwise strong rally, but dip buying was witnessed soon after prices fell below $1,900, causing some recovery in what remains the most volatile trading day for the bright metal in recent history. The delay in talks about a stimulus package for the American economy, the largest market for gold, meant investors didn’t give up on gold yet.
The last few trading sessions indicate gold is facing resistance above $2,050 per ounce and a support below $1,900 an ounce.