Gold touches 39-month low
Karachi (Sept 21) The price of gold on Saturday declined to a 39-month low at Rs47,450 per tola (11.66 grams) in Pakistan in line with the downward trend in the global markets, said All Sindh Saraf and Jewellers Association President Haroon Rasheed Chand.
“This is (Rs47,450 per tola) a 39-month low price,” he said, adding that the decline in the price was in line with the downward trend in the world markets.
Ahsan Mehanti, head of Arif Habib Commodities, said gold was hovering near eight month low in US. It closed at $1,216 an ounce in New York last night with a decline of $6 an ounce. “Improvement in economic fundamentals of US and other world economies, and continuous appreciation in dollar are causing decline in gold.”
The latest round of fresh fall in gold was triggered on speculation of increase in interest rate by Federal Reserves (US) amid improvement in its economy. “At the end of a two-day meeting on Thursday, Fed has raised its interest-rate forecasts,” he said.
Moreover, the gradual winding up of US programme of purchasing assets was strongly supporting downward trend in bullion.
He recalled the 2008 world recession that had convinced Fed to initiate an asset purchase programme. Under the programme, Fed was injecting $85 billion into its crumbling economy every month through buying bonds and treasury.
However, a sharp recovery in its economy seen in the last 30 months convinced Fed to wind up the programme this year. It has declined its monthly injection by $40 billion in the last nine months to $45 billion. “It is expected that Fed will slash the monthly injection to zero in the next couple of quarters - depending upon positive/negative changes in its economy,” he said.
He said ease of tension in geo-politics with references to Russia-Ukraine and ISIS crises also convinced investors to liquidate investment in gold.
“Stock markets boom world over is suggesting that investors are relocating their investment from gold to stocks and currency markets,” he said, adding most of the world equity markets were hovering at an all time high.
Haroon Chand added that China was the biggest buyer of gold across the world. However, it was not active in the market for about last six months.
“Gold may touch $1,180 per ounce under the current cycle of decline,” he said.
The bullion has decreased by $706 an ounce, or 36.73 percent, to date ($1,216 an ounce) from an all time high of $1,922 an ounce recorded in 2011, he said.