Gold has Continued to Dominate
In the past three weeks, gold has continued to dominate the market as prices continue to reach record highs. Tuesday, the price of gold rose by Rs4,500 to a new all-time high of Rs182,700 per tola (11.66 grams), continuing its upward trend.
Likewise, the price of 10 grams of gold increased by Rs3,858 to Rs156,636. On the global market, the price of gold increased by $12 to $1,810 per ounce.
Price per Tola has Increased by 13.3%
Since December 1, 2022, the price per tola has increased by 13.3%, or Rs21,500. There are questions as to whether the escalating price is sustainable or if it is a bubble.
According to the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of gold per tola in Pakistan is Rs5,000 more expensive than in Dubai. This indicates that the Pakistani gold market is currently more expensive than the global market.
Pakistani Bullion Price’s Sustainability
The change from “under cost” to “over cost” raises questions about the Pakistani bullion price’s sustainability.
Recall that demand for gold reached a record high of 13 tonnes (worth approximately $800 million) in July-September 2022, increasing by 34% quarter-on-quarter, in the three months following the depletion of the US dollar and other major foreign currencies from legal markets.
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Is there Still Gold?
According to recent reports, gold has also run out in Pakistan.
Historically, the US Dollar was Pakistan’s most preferred investment asset. During periods of high inflation, investors placed their savings in foreign currency to protect them from the depreciating rupee.
Official Price of Gold
The difference between the official price of gold and its market price is widening. The association has announced that the official price per tola in the Sarafa market is Rs182,700. However, it is being sold for approximately Rs185,000 per tola.
Previously, association member Abdullah Abdul Razak Chand stated that about 90-95% of the demand for gold in recent years has come from investors rather than genuine buyers.
Financial Analysts and Goldsmiths
Due to the devaluation of the rupee against the U.S. dollar during the current cycle, financial analysts and goldsmiths expect the price of gold to rise to Rs200,000 per tola.
However, they also believe that an influx of $6 to $8 billion from multilateral and bilateral creditors will deflate Pakistan’s price bubble.
Price of Silver per Tola Increased
The price of silver per tola increased by Rs30 to a new all-time high of Rs2,050 in the country. The cost of 10 grams of silver increased by Rs25.72 to reach Rs1,757.54.
As the rupee remained unstable, senior goldsmith Muhammad Shafi Khan told The News that locals were investing in raw gold. However, jewelry sales were not increasing, and jobs were being lost on the gold market.
Gold for Weddings
He stated that families with high incomes purchased gold for weddings and other special occasions, whereas the majority of people have shifted towards synthetic jewelry.