Wednesday, May 21, 2008
By Faryal Najeeb

KARACHI: The gold price has once again crossed the barrier of Rs20,000 per 10 grams and continues to remain under cost in comparison to the Middle East bullion market, as it stood at Rs20,074 per 10 grams on Tuesday. Whilst international investors made a dash towards yellow metal investment to hedge them against inflation following a strong dollar and rising oil prices, the local bullion market remained cold and unresponsive.

President, All-Pakistan Supreme Council of Jewellers Association, Alhaj Haroon Rashid Chand said that gold cost Rs23,400 per tola in Pakistan and was under cost by Rs600, making local gold ideal for smuggling to Dubai.

“We are suffering due to our currency being weak against the dollar. Hence our investors having low purchasing power are discouraged from investing in the precious metal,” he said. Chand predicted that the low period in the yellow metal’s cycle has ended and it would now witness a continuous spiral, crossing above $1200 per ounce barrier over the next few months, without a break in the hike.

In the international market, gold stood at US$908 an ounce on Tuesday.

The World Gold Council (WGC) released a report the same morning, stating that the demand for gold is being pressured by high prices.

WGC said that the demand for the precious metal hit a five-year low in the first quarter of the year, as high prices significantly affected buying of gold jewellery, bars and coins.

Demand growth in the first quarter was heavily reliant on the investment sector, with buying by exchange-traded funds doubling year-on-year in the first quarter, it added.

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