Gold rate on Monday jumped to a historic high after the Pakistani rupee slumped significantly against the US dollar as the country struggles to secure external financing.
According to the data released by All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of gold (24 carats) soared by Rs3,100 per tola and Rs2,656 per 10 grams to settle at Rs217,700 and Rs186,643, respectively.
The yellow metal’s jump was in line with the rupee movement — which plunged fell 2.44 or 0.85% against the US dollar in the interbank market — and an increase in the weekly inflation.
Weekly inflation jumped up 0.92% week-on-week and 44.49% year-on-year during the seven-day period that ended April 6, as prices of sugar and chicken surged on account of Ramadan and likely hoarding.
Gold is often hailed as a hedge against inflation, increasing in value as the purchasing power of the dollar declines and due to the seasonal demand in the holy month of Ramadan.
Investors’ attention shifted towards the precious commodity during the week as the economic tensions continue to rise amid the International Monetary Fund (IMF) reviewing external financing commitments from friendly countries before it releases bailout funds.
The delay in the revival of the programme negatively impacted the currency market which in turn is bolstering demand for gold.
The association also mentioned that the price of gold is Rs5,000 per tola “undercost” in Pakistan, as compared to the Dubai market, showing that the Pakistani gold market was currently cheaper than the global.
Meanwhile, silver prices in the domestic market also jumped to historic highs after an increase of Rs30 per tola and Rs25.72 per 10 grams to settle at Rs2,480 and Rs2,126.20, respectively.
In the international market, gold price dropped $6 per ounce to settle at $2,002.