Jewellers hesitant to invest in gold despite Rs7,000/tola drop
PAKISTAN (June 30) The gold price has dipped by around Rs7,000 per tola during the last one month, however the jewelers are still hesitating to invest in precocious metal in fear of more decline in future. Market sources said that the rates of gold in local markets, which remained open on Saturday, increased by around Rs300 to Rs46,800 per tola. They said that price of gold last day (Friday) dropped by Rs 1,000 per tola (11.25 grams)to Rs46,500 in the country, following a $27 per ounce reduction in the international gold market. They said people were delaying jewellery procurement in the hope that international bullion prices would fall further and they could gain more benefit. They said that the US dollar was gaining strength against other major currencies and even China, which used to invest in gold heavily, had shifted its focus towards greenback.
According to statistics import of gold rose by 95 per cent in terms of quantity and value and during July-May 2012-2013 gold import stood at 5,752 kg worth $306 million as compared to 2,949 kg amounting to $157 million in the corresponding period last fiscal year. Similarly, exports of jewellery hit new peak to $1.2 billion in July-May 2012-2013 as compared to $712 million in the same period last fiscal. Market sources said that the precious metal dropped to a three-year low in the international market to near $1,200 an ounce, putting it on course for its worst quarterly performance in over half a century. The price of 10 gram gold went down by Rs857, making it Rs39,900 per tola.
Predicting a further decrease in gold prices, Lahore Sarafa Bazar Association president Hafiz Muhammad Ahmed said that rates of gold are expected to go down to Rs42,000 per tola. He said that one tola gold price on June 26 dipped by Rs2,300 to Rs47,500 after the yellow metal price on the world market tumbled by $58 per ounce at $1,225. He said that the value of the dollar is increasing, therefore, people have started selling their gold to buy currency. Earlier they were selling off currency to buy gold. Market experts said that America’s economy is improving as it has improved its relationship with North Korea, Iran and other nations, giving a boost to its economy.
Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, were unchanged at near four-year lows for a second consecutive day. The fund has recorded unprecedented outflows of 12.26 million ounces so far this year, down 28 percent to 31.7 million ounces. Concerns over a credit crunch and economic growth in China also weighed on investors.
They said that in global market gold fell below $1,200 an ounce to its lowest since August 2010 on June 28, on track to post its worst quarter on record, as fears persisted that the US Federal Reserve will wind down its monetary stimulus soon. Bullion has taken a beating, losing as much as 15 percent or about $200 an ounce, since the beginning of last week when Fed Chairman Ben Bernanke laid out a strategy to roll back the bank’s $85 billion monthly bond purchases in a recovering economy. This supports an increase in real interest rates, making gold comparatively less attractive. They said that gold has been battered by the Fed’s policy stance, while the change in U.S. real interest rates, which have turned positive in June, has become an element disproportionately negative for gold relative to other commodities.