Gold price hits another record

Gold price in Pakistan has surged to a record high of Rs 47,500 per tola (11.665 grams) due to the price hike in the international market.
As the trend of increase in gold prices continued in local and international markets, gold price surged by Rs 200 per tola in Pakistan on Thursday. According to sources, bullion rates climbed to the highest level of Rs 47,500, surpassing the previous record of over Rs 46,350 per tola in the local market. The increase was seen after price of gold in the international market hit a record high with the depreciation of Pakistani rupees, sources said. This was another record high price following the international price of gold hit a fresh record i.e. above $1,500 per ounce. Price of gold has risen above $1,500 an ounce for the first time after concerns regarding global economic recovery lifted the metal’s appeal as a haven. In Hong Kong trade, gold reached $1,500.70 an ounce, which traders said was mainly due to Standard and Poor’s downgrade of its outlook on US debt.
‘dollar sinking’: The Pakistan Economy Watch (PEW) has said the unprecedented hike in gold and silver prices suggests that investors are increasingly losing faith in the weak US dollar.  It also indicated that the development also hints at lack of confidence amongst investors in the American political and economic system as well as the capabilities of leaders. “Such developments can be attributed to the flawed spending policy and the massive debt incurred by the US, Pakistan Economy Watch (PEW) President Dr Murtaza Mughal stated. Spending which continues to be largely derived from credit and outstrips income has transformed the US from largest lender to the biggest debtor, he observed.
The US government debt is set to exceed 70 percent of GDP, a situation which will hurt its prestige, power and influence, he said, adding that the status of the dollar as the international currency of choice will also be jeopardised. A country needs to have stable political and economic institutions to dovetail with a stable currency, he asserted. It was also claimed that dependence on greenback has become increasingly dangerous while calls for another international reserve currency are yet to be translated into reality.  He suggested that China is well placed to provide an international reserve currency as it retains the largest cash reserves while the Chinese enjoy a strong government and relatively fewer economic worries. Dr Mughal noted that the entire world is witnessing the sheer scale and resources that Beijing deploys. He emphasised China’s rapid rise pointing out it is already the world’s largest exporter, net creditor and by 2014, China’s economy might just overtake the US in absolute size.