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As markets waited for clues on the State Bank of Pakistan’s interest rate hike trajectory, gold prices increased to a new high on Tuesday, driven up by concerns about inflation and lingering political risks.
The price of gold increased by Rs. 500 per tola and Rs. 428 per 10 grammes, respectively, according to the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), to settle at Rs. 187,700 and Rs. 160,922.
According to the association, the price of gold in Pakistan has been "overcost” by Rs6,500 per tola when compared to prices in Dubai. This indicates that the price of gold in Pakistan is currently higher than it is on the global market.
The change from "under cost” to "over cost” also calls into question the long-term viability of Pakistan’s bullion price.
The difference between gold’s official price and the price at which it is being sold is widening. The association has announced the official price at Rs187,700 per tola in the Sarafa market. It is, however, being sold at a higher price.
Financial pundits and goldsmiths anticipate that the price of gold may rise to Rs200,000 per tola due to the rupee devaluation against the US dollar under the current cycle.
However, they also believe that an inflow of $6-8 billion from multilateral and bilateral creditors will burst the pricing bubble in Pakistan.
