Thursday Jul 23, 2020
KARACHI: Gold rates in Pakistan have continued rallying to reach yet another all-time high of Rs117,300 a tola on Thursday, as the global economy headed on a path of recession due to the ongoing coronavirus pandemic, even though vaccine trials around the world have been churning out successful results.
Gold rates issued Thursday by the All Sindh Sarafa and Jewellers Association (ASSJA) indicate a tola was Rs2,300 costlier now. The price of 10 grammes of gold shot up Rs1,972 to Rs100,566 as well.
Moreover, the international gold rates have gone up to $26 an ounce to almost $1,882. The yellow metal has been staying above $1,800 in the global markets — close to nearly the nine-year peak hit in the previous session — as fears of economic stagnation grew owing to the skyrocketing coronavirus cases.
On Thursday, gold rates shot up for a fifth straight session as escalating tensions between the US and China increased its safe-haven appeal.
Spot gold was up 0.4% to $1,878.76 per ounce at 11:41am GMT, having hit its highest since September 2011 at $1,888.26. On the other hand, US gold futures rose 0.6% to $1,876.70.
“Gold as store of value has significantly enhanced so it wouldn’t be a surprise if it rises to $1,900,” Bank of China International analyst Xiao Fu said.
Geopolitical risks, worries about further tensions between Washington and Beijing, and ample liquidity from widespread central bank stimulus measures are driving prices, she added.
The US has given China until Friday to close its consulate in Houston, Texas, following allegations of spying. Supporting bullion further, the dollar index touched a more-than four-month low.
Expectations of another round of US stimulus measures also helped gold, since it is considered a hedge against inflation and currency debasement.
Indicative of investor sentiment, holdings in SPDR Gold Trust — the world’s largest gold-backed exchange-traded fund — rose 0.4% to 1,225.01 tonnes on Wednesday, the highest since March 2013.
“Gold could overshoot much higher to the upside but the subsequent decline will be quite dramatic as well ... As more economies reopen and return to normal activity, the economic data improves then there will not be much need to pile up in gold,” Xiao said.
Elsewhere, silver fell 1.4% to $22.70 per ounce after rallying to a nearly seven-year high, spurred by hopes for a revival in industrial activity. Palladium declined 1.1% to $2,124.65 per ounce, while platinum fell 1.7% to $906.08.
Market tightness in the second half of 2020, supported by monetary and fiscal stimulus measures, should support palladium prices over the next 12 months, UBS said in a note, adding it expected the auto catalyst metal to reach $2,500 an ounce by mid-2021.