KARACHI: Gold prices continue to surge in the local market based on the demand backed rally in international markets. The per-tola price of 24-karat gold in Pakistan on Wednesday increased by a massive Rs4,800 to reach Rs128,700, as against its previous close at Rs123,900.
Likewise, the price of 10-gram increased by Rs4,116 to Rs110,340 in the local market.
Silver also witnessed an uptick as per tola price of the commodity went up by Rs130 to reach Rs1,630.
Gold prices in Pakistan continue to breach all peaks as international investors pump money into buying gold due to the Covid-induced uncertainty. With coronavirus acting as the largest threat to the global economy, investors seek refuge in the safe-haven asset in order to diversify their portfolio and prevent loss of value.
While there is an increase in demand for gold in the international market, there has been little to no buying in the local market.
Imran Khan, of Stylish Jewelers, a jewellery shop in Karachi, said, “People are only coming to sell their gold and not buy. Most of our customers are coming back to sell gold they bought at cheaper rates, especially due to the economic distress Covid has brought. Demand for gold in the local markets has dropped tremendously due to weak purchasing power, loss of livelihoods, and the wedding season being observed with simplicity.”
However, the trend is different in the international market, where the surge in gold prices is not due to a supply shock of the metal, but due to demand rally.
In the international market, gold surged to a record high on Wednesday owing to a weakening dollar and falling returns on US bonds. Owing to the low interest rate environment to push the economy, gold managed to breach its historic resistance of $2,000 an ounce.
Breaking above $2,000 for the first time on Tuesday and hitting a new high of $2,044.34 an ounce earlier on Wednesday, spot gold was up 1.1pc at $2,041.09 by 1337 GMT.
Gold has gained nearly 35pc in value this year owing to Covid-induced uncertainty, making it one of 2020s best performing asset.