SYED MOHAMMAD TAHIR
LAHORE: At a time when gold buying season is going to out owing to the advent of Ramazan month in Pakistan and plummeting demand in India, the world’s largest gold consumer, when wedding and festival season came to an end, the shopkeepers and buyers have taken a sigh of relief on the stability of precious metal’s rates.
Conversely, gold prices soared in America as resilient demand for coins and bars remained high in the US equities market in last week. The brokers are of the view that rising geopolitical tensions in the Middle East also boosted the metal’s safe-haven appeal.
Western diplomats said the United States is considering setting up a no-fly zone in Syria, which would represent its first intervention in that civil war, after the White House said Syria had crossed a “red line” by using nerve gas. The metal rose about 0.3 percent on the week. It has now posted gains in three of the last four weeks following a historic two-day selloff in mid-April.
Last week, gold prices in Pakistan hovered near Rs 52,700 per tola after touching a peak of Rs 65,000 per tola last year. While US data in last week showed consumer sentiment edged off a six-year high in June, whereas manufacturing output picked up a bit last month after two straight months of declines, suggesting the economy remains on a moderate growth path. Markets will watch closely the US Federal Reserve policy meeting on June 18 and 19. Most economists expect the Fed to scale back the size of its bond purchases by yearend, and several expect reduced buying as early as September.
Likewise, in London gold held steady near $1,385 an ounce last week and was on track to end the week little changed as dealers’ awaited clearer direction on the Federal Reserve monetary easing policy. The Fed’s next policy meeting takes place early next week. An array of firmer-than-expected US data recently has fuelled speculation it could be on track to rein in its $85 bullion monthly bond-buying programme. Spot gold was steady at $1,385.61 an ounce at 1337 GMT, having earlier dipped as low as $1,378.04, down 0.5 percent. Gold is little changed since last Friday, and has ended the last four weeks in a $10 range. “(Gold) cannot break below $1,370 and cannot break above $1,420,” Afshin Nabavi, head of trading at MKS, said.
Though the gold rates have been reduced significantly but still it is out of the reach of common people in Pakistan and people who intend to buy yellow precious metal are still waiting for more cut in its rates. As off-season in the shape of Ramazan month is just drawing to near, it is expected that rates of gold would further fall. In the neighbouring countries like India, the demand of gold is also falling on the pretext of multiple reasons including wedding and festival season coming to an end.