Demand for gold drops in local market as price extends gains

• With a fresh increase of Rs600, gold prices settle at Rs127,800 per tola.
• The increase in prices is negatively affecting local demand.
• The precious commodity has gained Rs9,800 in the past six sessions.

KARACHI: Gold prices recorded a gain of Rs600 per tola in the local market on Monday as economic uncertainty sparked a flight from risky commodities towards safer ones.

Gold prices in the local bullion market recorded an increase of Rs600 per tola and Rs515 per 10 grams to settle at Rs127,800 per tola and Rs109,568 per 10 grams.

According to the All Sindh Saraf and Jeweller Association, the precious commodity has gained Rs9,800 in the past six sessions.

Gold is considered one of the safest investments, hence, its price is skyrocketing as the investment is pouring in at a rapid pace.

However, the increase in prices is negatively affecting the local demand.

"We do see some seasonal demand because of the wedding season but overall, lack of purchasing power has disrupted the local demand for gold," a gold dealer had told Geo.tv.

As the dollar continues to strengthen day after day, investors' confidence in the currency has tumbled and they have diverted their investment to gold.

Earlier, AA Commodities Director Adnan Agar had said: “The yellow metal is gaining attention due to the uptrend in commodity prices — especially coal and oil — in the global market."

"Inflation is always a favourable scenario for gold," Agar had said, adding that concerns regarding an economic slowdown in Pakistan and worldwide was adding fuel to the uptrend in gold prices.

Local dealers had also said that the return of inflationary days in Pakistan and around the world has once again invited investors’ attention towards the yellow metal as at such a time, safer commodities become attractive.

The price of gold remained recorded an increase of $9 to settle at $1,802 per ounce in the international market.

It is pertinent to mention that the gold rates in Pakistan are around Rs1,500 below cost compared to the gold rate in the Dubai market.

Meanwhile, silver prices in the domestic market remained unchanged at Rs1,470 per tola and Rs1,260.28 per 10 grams today.