In a recent twist, the once-soaring gold prices in Pakistan have taken a considerable dip, losing around Rs20,000 per tola over the past 25 days. This decline can be attributed to a combination of factors, including a government crackdown on speculators, a strengthening rupee, and a drop in global market rates.
The All Pakistan Gem and Jewellers Association (APGJA), which typically announces daily gold rates, ceased its rate announcements on September 13. Traders have since been quoting prices arbitrarily, leaving customers in uncertainty. Haji Haroon Rasheed Chand, the president of APGJA, has promised several resumption dates, with the latest one set for October 9.
On Saturday, the price of 24-karat gold ranged between Rs194,000 and Rs196,000 per tola, based on the global market rate of $1,832 per ounce. This marks a significant decrease from the Rs215,000 per tola on September 12, when the global market rate stood at $1,911 per ounce.
The contrast in Saturday’s gold rates is even starker when compared to its peak in the second week of May, reaching a historic high of Rs240,000 per tola, with global prices at $2,031 per ounce and the dollar trading at around Rs288.
As of October 6, the exchange rate for the dollar was Rs282.75, down from Rs299.75 on September 12 and its peak of Rs307 on September 5.
A recent crackdown against speculators and smugglers saw the brief detention of five gold traders, leading to a decline in business for gold shops. These traders were later released, with Mr. Chand pledging to promote legal trade, encourage documentation, and computerization of trade, and issue daily market rate updates. However, these changes have yet to materialize in the market.
Despite the drop in gold rates, customers are facing challenges finding small gold bars. Some suspect that traders may be hoarding these bars to profit when domestic rates rise in response to global price increases or other factors.
Jewellers argue that the shortage of small gold bars is due to hesitant sellers, particularly those who bought at higher rates and are now waiting for prices to recover. Investors, too, have adopted a wait-and-see approach following the recent crackdown, the rupee’s rise, and falling gold prices.
Mohammed Sohail, CEO of Topline Securities, noted that speculators were rapidly converting their dollars and gold holdings into cash due to the crackdown and the ample supply of dollars in the open market. This, combined with declining global gold rates, has had a direct impact on domestic prices.
Mohammad Arshad, chairman of the All Pakistan Jewellers Manufacturers Association, believes that the current drop in gold prices might encourage genuine buyers and middle-income families to purchase jewelry sets during the ongoing peak wedding season. This shift in consumer behavior comes as investors watch from the sidelines after the government’s crackdown on gold speculation.
Previously, rising gold prices, high electricity bills, and soaring food prices had impacted jewelry sales, prompting many to limit their purchases to lower-weight sets or even sell small gold items to cover essential expenses.