Gold price falls by Rs19,500 in seven weeks

After touching an all-time high of Rs132,000 for a tola of gold in the first week of August, gold prices have now dropped to Rs112,500 by September 24, according to rates compiled by the All Sindh Saraf and Jewelers Association.

Gold’s international price, after an all-time high of $2,063 per ounce on August 6, dropped to $1,855 by the time this story was filed. In Pakistan, the price is matched with the precious metal’s international price.

Despite the declining trend, however, gold expert Adnan Agar, who is the director of AA Commodities, says the triggers which prompted gold prices to rise are still there.

As countries around the world started to go into lockdowns during March amid the COVID-19 pandemic, feeding on the uncertainty, gold prices started to swell from $1,471 per ounce to reach an all-time high of $2,063 by August 6.

Agar says development of the COVID-19 vaccine and its proper distribution around the world would only cool down the prices of gold and other metals.

“According to my assessment, gold prices may fall to a range of $1,790 to $1,810. From there, it will bounce back. The price of gold increased too early so consolidation or profit-booking has been happening,” he said.

Agar says he doesn’t see gold losing appeal anytime soon.  

“I think it will take one to two years for the precise development of a vaccine, its production and distribution. Only an announcement of a potential precise vaccine may not have a significant impact on the price of gold,” Agar said.

He said coronavirus cases were still significant around the world, including in the US, Europe and India.

The US may have one of its most controversial elections this year in November as Donald Trump has suggested that he won’t except a defeat, he said. 

Elections itself, Agar said, add to political uncertainty in the US. It can cause gold prices to rise for its safe-haven appeal to investors during uncertain times.   

He said the price should be followed closely for the next three months as it can be highly volatile.