Gold prices reached historic highs as the rupee continued to lose ground against the dollar. The liquidity crunch has increased safe-haven buying in the local market.
The price of precious metal recorded the same gains as yesterday that is an increase of Rs500 per tola and Rs428 per 10 grams to settle a historic high of Rs170,900 and Rs147,376, data released by All Pakistan Sarafa Gems and Jewellers Association (APSGJA) showed.
Meanwhile, silver prices lost ground after losing Rs30 per tola and Rs25.72 per 10 grams. The prices closed at Rs1,960 and Rs1,680.38.
The association mentioned that although gold hit an all-time high in Pakistan, its price still stood below cost. Gold is cheaper by Rs3,000 per tola compared to its price in Dubai.
According to market practice, local prices of gold usually go up on the rupee’s depreciation against the US dollar and declining prices of commodities in the international market.
Rupee depreciation against the US dollar triggered a rally in the gold market, leading to an increase of Rs8,850 per tola in the last nine sessions.
In the international market, gold prices settled at $1,782 after an increase of $4 per ounce.
Commodities experts cite a shortage of US currency as the major reason behind the constant increase in gold prices in the local market.
“Investors want to invest in the dollar because of the rising difference between the open market and the interbank market rate, which is around Rs20-30; however, despite the significant difference dollar isn’t available and people are concerned about the financial situation in Pakistan and chances of default,” AA Commodities Director Adnan Agar explained the reason behind sudden shift in investors focus.
He added that because of the speculations that the dollar can reach 350-400 against the rupee; investors were trying to invest in the precious commodity.
“However, due to its [dollar] shortage they have shifted their focus toward gold as the price of the yellow metal is also rising in the international market,” Agar maintained.