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Gold price jumps Rs3,100 in Pakistan in two days

But expert says it will keep touching lower lows

SAMAA | - Posted: Apr 2, 2021 | Last Updated: 4 months ago
SAMAA |
Posted: Apr 2, 2021 | Last Updated: 4 months ago

Photo: Samaa TV FILE

The price of gold rose by Rs3,100 in Pakistan over the last two days, according to rates shared by the All Sindh Saraf Jewelers Association. A tola is now selling for Rs106,000.

The gold price has been dropping steadily. It fell to almost a one-year low at $1,683 an ounce last month. The price recovered but again fell to nearly the same level before bouncing back again now.

The price of gold in Pakistan follows its price in the international market.  

“Gold will touch lower lows now every now and then,” said Adnan Agar, a commodities expert. “I expect gold price to drop again to touch a lower trough next week.”

He said the US employment data has been impressive as the world’s biggest economy begins to open after the pandemic and subsequent lockdown. “This will inversely affect the gold price,” Agar said.

He, however, said that April 2 has been observed as Good Friday — a holiday in the Western nations — and the gold price did not incorporate the US employment data news. The expert said that nearly a million people have been employed and most of them must be the ones who lost their jobs during the lockdown.  

“I expect the price of gold to fall on Monday,” he said.

Agar said that better employment rate means a revival of economic activity. It means companies are hiring again to resume production or services.

“Investors may start investing back in stocks looking at the data. Moreover, the US economy has been injected with around $9 trillion in stimulus package and the interest rates are also nearly zero,” he said. “All these factors show that the companies have favorable factors to resume their work and investment will move towards capital markets.”

The gold price stood at $1,728 an ounce in the international market by the time this story was filed. A bitcoin is selling for nearly $60,000 but its price fluctuates very quickly.

As the economy starts improving, investors move to capital market from gold and other metals. The situation in the US, the biggest economy of the world, plays an important role in influencing gold prices globally.

The price of gold has gradually been falling across the world. It has been falling since the emergence of several vaccines against the novel coronavirus. The vaccination process has begun in many countries, including the US.

Agar believes that gold is not losing its value only to the improving Covid-19 situation. Cryptocurrencies, especially the bitcoin, have been attracting investment too, which has negatively impacted the gold price. 

Prices of gold and other precious metals increase during uncertain times such as wars and disasters as these are considered safe havens for investment. Their prices fall when stable times are expected ahead. Investors turn to gold when things don’t look in favor of the economy and stocks. The same happened during the Covid-19 pandemic.

Agar said the price of bitcoin has increased in the recent past, bringing it in competition with gold and other precious metals, which are traditionally considered safe havens for investment. “Bitcoin is attractive for the young investors,” he said.

The gold price started increasing internationally as countries across the world went into lockdowns in March 2020. It rose from $1,471 to reach an all-time high of $2,063 an ounce by August 6. The per tola price in Pakistan peaked to Rs132,000 at the time.

Agar said the gold price will fall to a new low before bouncing back and then again fall a bit lower than the previous low in the coming days.

“But you never know precisely what’s going to happen for instance if the coronavirus situation aggravates, gold can again bounce back,” he said.               

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