Gold trading at historic high of Rs143,600/tola

KARACHI: The prices of gold witnessed a significant hike of Rs1,950 in the local market to an all-time high of Rs143,600/tola on Tuesday as the rupee made another record low despite measures taken by the State Bank of Pakistan.

Gold 24kt gained Rs1,950/tola and Rs1,672/10 grammes to hit Rs143,600/tola and Rs123,114/10 grammes, respectively. The precious metal recorded the previous all-time high of Rs141,650/tola on Monday, May 23.

The yellow metal continued shattering records of new highs as the local currency dived to another record low despite the central bank’s measures to increase the policy rate by a significant 150 basis points to 13.75 per cent on Monday.

Additionally, the SBP also tightened the regulations regarding auto financing in a move to curb demand to provide stability to the local unit.

However, these measures had little to no impact on the value of rupee as soaring macro-economic conditions resulted in the rupee diving to Rs201.41 against the dollar in the interbank foreign exchange market.

The traders and investors’ confidence remain shattered due to the consistent uncertainty on the domestic political and economic front where PTI has announced the date of the long march to Islamabad.

Similarly, the current account deficit of the country is also ballooning due to elevated global commodities prices, and the dwindling forex reserves of Pakistan which are below the level of covering the three months import bill of the country.

Pakistan has resumed its dialogues with the International Monetary Fund (IMF) for the revival and extension of the Extended Fund Facility (EFF), however that too could not hold the flight of the dollar against the dollar, as panic buying of the foreign currency was seen in the market.

The speculations surrounding the talks between Pakistan and the IMF and a likely negative outcome of the negotiations due to the government’s decision of maintaining subsidies on the prices of fuel and electricity has further fueled the uncertainty in the market.
The price of gold in the international market declined $4 per ounce to $1,858/ounce.

Pakistan’s forex reserves reduced to an alarming level, as the foreign exchange reserves held by the State Bank of Pakistan (SBP) were down $145 million to $10.16 billion on a weekly basis, compared with $10.30 billion on May 6.

The overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $16.16 billion, while the net reserves held by banks amounted to $5.99 billion.

The price of silver remained unchanged at Rs1,590/tola and Rs1,363.16/10 grammes, respectively, while the international silver prices were recorded at $21.95/ounce on Tuesday.