Gold prices hit lowest in five years

Per tola of 24 karat gold sold for Rs 43, 600 in local gold markets

Jeweller says low prices should encourage people to switch to gold instead of buying artificial jewellery

Gold prices across Pakistan touched a five-year low on Friday with per tola price of 24 karat hitting Rs 43, 600 per tola and 22 karat being sold at Rs 39, 966 per tola.

While various factors pull the price of gold in the downward direction, commodities investors could feel the urge to wait a bit more before looking to buy.

Rana Shoaib, a local jeweler, said the low prices would attract people to buy gold instead of artificial jewellery. He said that heavy selling by China in the Hong Kong market had brought the price of the precious metal under pressure in recent weeks.

“We expect that per tola price of 24 karat gold is expected to hover above Rs 44,000 for the rest of 2015. Gold traded at Rs 44,250 per tola on Thursday,” he said.

Gold prices in the international market have declined to just above $1,100 per ounce from the peak of $1,895 per ounce in September 2011, registering a decline of about 42 per cent in almost four years.

According to media reports, each of the two gold-based mutual funds being managed by Pakistani asset management companies has posted a negative return in the last 365 days.

Atlas Gold Fund and UBL Gold Fund have posted absolute returns of -8.3% and -9.8%, respectively, over the one-year period, according to the Mutual Funds Association of Pakistan.

While there are many reasons for the less pronounced decline in local retail prices, the overall downward trajectory reflects the subdued gold demand in international markets.

According to the latest quarterly data released by the World Gold Council (WGC), total global gold demand in the first quarter of 2015 clocked up at 1,079.3 tonnes, down 1% from a year ago and 3.1% less than the five-year average of 1,114 tonnes.

In dollar terms, the year-on-year decline in the global demand for gold remained 7% in January-March.