Gold rates in Pakistan surge to historic high, clocking in at Rs128,700 a tola

Web Desk

August 05, 2020

Gold rate in international markets went up $66 an ounce to a little over $2,041. REUTERS/Neil Hall/Files

KARACHI: Gold rates shot up Rs4,800 per tola, the All Sindh Sarafa and Jewellers Association (ASSJA) said Wednesday, with prices around the world surging to their historic high as economic woes and resurgence in coronavirus cases kept investors on edge.

With the latest bump, gold is now priced at Rs128,700 per tola.

On the other hand, the international gold prices have gone up $66 an ounce to a little over $2,041.

Gold hits $2,000 an ounce for first time

Gold prices on Tuesday hit $2,000 an ounce for the first time, the latest surge in a commodity seen as a refuge during economic uncertainty.

The precious metal hit the symbolically important benchmark near 4:15pm GMT before retreating somewhat then crossing the line again about 30 minutes later.

Gold prices have risen more than 30% this year as the coronavirus outbreak has weakened the economy and clouded the global financial outlook.

Also weighing on investors were concerns over whether the US will pass another spending measure to support the world's largest economy as it weathers a prolonged and deadly coronavirus outbreak. Democrats and Republicans in Congress have yet to strike a deal despite days of negotiations.

"The gold price is viewed as buying opportunities," Commerzbank said in an analysis.

"This comes as no surprise in view of the ongoing high numbers of new COVID-19 cases, the continuing cliffhanger in US Congress over an additional economic aid package, ever more widespread negative real interest rates and highly-valued stock markets."

Wall Street stocks were cautiously advancing around 1645 GMT with the Dow up 0.4% as traders digested reports claiming recent progress towards a deal in Washington.

"There's a big desire from both parties to get some kind of stimulus passed. I think the market is expecting that," said Bob Phillips of Spectrum Management Group.

Markets rise as US stimulus seems close

Stock markets on both sides of the Atlantic also climbed on Wednesday after a mixed Asian showing, with hopeful traders tracking talks on a key US stimulus package.

Uncertainty about the global economic outlook caused by the coronavirus pandemic meanwhile caused investors to hedge their bets, helping gold to fresh highs day after the haven asset broke through $2,000 per ounce for the first time.

"Stocks are back in rally mode," said Chris Beauchamp, the chief market analyst at the IG trading group.

"That both equities and the supreme risk-off asset (gold) are moving higher just shows how conflicted investors are — they can't avoid being tempted by equities, but they can also read the unending stories of bankruptcies," he added.

Among upbeat news in Europe were strong rebounds for the UK services sector and sales of new cars after both plummeted during the country's lockdown.

The IHS Markit/CIPS Services purchasing managers' index (PMI) for Britain rose to 56.5 in July from 47.1 in June.

A reading above 50 indicates an expansion, and July's rebound indicated "the very early stages of recovery... from an exceptionally low base", said Tim Moore, economics director at IHS Markit.

'Bulls engaged'

Most of the markets' focus was on the United States, where Republicans and Democrats are negotiating over a fresh economic rescue package, with some reports suggesting decent progress.

"The political wrangling has been going on for over one week, but dealers are still a little optimistic that an agreement will be reached," said David Madden at CMC Markets.

"It was reported that talks have been productive, so that has been keeping the bulls engaged."

But ongoing China-US tensions prevented traders from getting too invested in equities.

"Rising trade tensions between the US and China could open up an unwelcome can of worms," said Stephen Innes at AxiCorp.

"The market's primary thesis on what ultimately matters for growth assets is whether a US-China geopolitical escalation morphs into an economic dustup."