KARACHI: The gold price soared to a record high at Rs115,000 per tola (11.66 grams) in Pakistan on Wednesday. The surge was in line with an uptrend in the commodity at global markets that kept growing with the surge in coronavirus infection cases in the world, especially in the US.
Gold has emerged as a safe asset in these challenging times of the coronavirus pandemic. People were aggressively buying gold to protect their cash from deflation.
“Countries across the world have injected trillions of dollars into their economies to counter the impact of Covid-19 on economic activities. The protective measure has, however, resulted into devaluing their respective currencies,” Rays Commodities former chief operating officer Adnan Agar said while talking to The Express Tribune.
Besides, the latest escalation in the world political tension following the US asking China to close its Houston consulate ahead of the US presidential election in November added fuel to an uptrend in gold, he added.
The international media reported that Turkey has emerged as the world top buyer of gold to protect its currency (lira) from deflation against the US dollar after tension between Turkey and US escalated over Syria and that Washington declined Ankara’s proposal for currency swap.
With the latest increase of Rs1,500 per tola on Wednesday, the gold price has surged by a total Rs6,100 in the last one-week. At the same time, its price soared close to recent nine-year high at $1,856 per ounce in the world market with a cumulative gain of $62 per ounce in the week (including an increase of $31 on Wednesday), according to All Sindh Saraf Jewellers Association (ASSJA).
“Gold is expected to surpass all-time high of $1,920 per ounce hit in 2011 this year (2020),” said Agar, adding, “The US (the worst-hit country by the Covid-19 at the world) is expecting a peak in infection cases sometime in August.”
But in the short-run, investors are expected to sell the commodity to book profit. “A $70-80 correction can be seen at around $1,860-1,865 per ounce before it gears up to cross all-time high and test around $2,000 per ounce,” he said.
The slowdown in infection cases at the world (especially in the US), the introduction of a successful vaccine and outcome of the US elections in November are the events that would invite a massive selling in gold, he said. The events may pull down gold price below $1,700 per ounce. But in the long-run, gold would hover over $1,700 per ounce, he commented.