Gold price continues moving north as the instable Pakistan rupee have made investors focus on a safer asset. The result is obvious: the yellow metal rate surged to Rs174,900 per tola.
It is the latest all-time high price for gold in the past few weeks which jumped by Rs2,200 on Monday, which means the value has increased by 8.5 percent (or Rs13,700) per tola.
In this connection, the market sources say around about 90 to 95 percent demand for gold is coming from the investors’ community instead of genuine buyers.
Meanwhile, the representative body of jewellers now says gold is currently overpriced [or over cost] by Rs4,000 per tola in Pakistan, as compared to the prices in Dubai. Thus, the gold market in Pakistan is more expensive than the world market.
Previously, they have been saying that the price rise in a result of more expensive gold in Dubai, which raises the question: why this hike in rate in Pakistan and why is the local market more expensive the world?
It also raised another questions as to whether the surging price is sustainable or constitutes an unsustainable bubble amid the shift from ‘under cost’.
Demand for gold hit a record high at 13 tonnes (worth around $800 million) between July-September 2022, rising by 34 percent quarter-on-quarter, in the three months after the US dollar, and other leading foreign currencies, went out of stock from the legal markets.
Earlier, the US dollar was the most preferred asset for investment in Pakistan. During high inflation days, investors parked their savings in the foreign currency to safeguard their funds from the devaluing rupee.
Some reports also suggest that the gold is currently out of stock in Pakistan – leading to another logical question: where all this gold has gone.
Hence, the difference between gold’s official and market prices is widening. The official price at Rs174,900 per tola but it has been actually sold at around Rs180,000 per tola.
Experts anticipate that the price of gold may rise to Rs200,000 per tola due to the rupee devaluation against the US dollar under the current cycle.