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Gold prices in Pakistan reached a new high on Monday, as the rupee continued to whimper against the dollar after being left to the mercy of turbulent market forces in an attempt to persuade the International Monetary Fund (IMF) to release a stalled loan, traders said.
The price of gold (24 carats) climbed by Rs1,500 per tola and Rs1,286 per 10 gramme, respectively, according to the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), to Rs210,500 per tola and Rs180,470 per 10 gramme.
The jewellers' group also claimed that local gold was "overpriced" in Pakistan by Rs5,000 per tola when compared to the Dubai bullion market.
Dealers, who have been targeting the 200,000+ per tola rate since the current price rise frenzy began, cited record-breaking rupee depreciation and a sharp fall in the country's foreign exchange reserves as important factors driving to the large price increase in the metal market.
Investors, on the other hand, were buying gold bars rather than jewellery, which not only lowered goldsmiths' profit margins but also put the labour force at risk of losing employment, as jewellery manufacturers moved to other professions in the lack of work, according to The News on Friday.
"There has been a drop in people's purchasing power as more people now use artificial jewellery," a goldsmith stated, adding that the majority of gold manufactures are now shifting to artificial jewellery.
The worldwide gold market nudged up on a lower dollar, as investor attention shifted to multiple central bank meetings this week for more clarity on their rate rise strategy, with the US Federal Reserve serving as the primary focus.
The spot price of gold rose 0.1% to $1,928.36 per ounce.
"Gold is moving away from a nine-month high as the US currency and rates stabilise as markets await the Fed's fresh policy direction," Han Tan, chief market analyst at Exinity, said.
The dollar was 0.2% weaker, making bullion bought in US dollars more appealing to clients holding foreign currencies.
Market investors largely anticipate the US Federal Reserve to raise interest rates by 25 basis points (bps) at the end of its two-day policy meeting on February 1.
Expected Fed rate rises to halt after economic data indicated signs of softening US inflation, while US consumer expenditure declined for the second month in a row in December, placing the economy on a weaker growth path moving into 2023.
Gold, which pays no interest, benefits from low interest rates because it lowers the opportunity cost of storing bullion.
