KARACHI, April 6: Investors, who used to be very cautious in putting up huge money in gold, are now gradually shifting their mood towards the yellow metal after being charmed by its rising trend in domestic prices and not by its glitter.
Leading gold players in the market are now not worried in revealing that the shining prices of the metal in the last one and a half years has definitely pushed up their sales charts since investors have generated some fresh interest in gold.
Local gold prices, highly dependent on the fluctuation in world markets, are now being quoted at Rs7,823 per 10 grams as compared to Rs7,600 per 10 grams in December 2003. In December 2002, it was selling at Rs6,288 per 10 grams when gold in international market was traded at $334 per ounce. On Tuesday, global gold rates closed at $415 per ounce.
"People are regularly buying gold biscuits particularly of 10 tolas," Chairman All Pakistan Gem Merchants and Jewellers Association (APGMJA), Akhtar Khan said adding that winds of change are now blowing in the gold market due to shift of stock and property investors towards gold.
Answering a query whether investment in gold holds any significance amid soaring stocks and property rates, he said that rising trend in domestic bullion prices has lured many investors (who also play in stocks and property) to take a deep plunge in the yellow metal.
Investors are buying gold bars in anticipation that the prices will rise further, he said adding that perhaps local investors are following the suit of foreign investors who are putting up huge money in the safe haven after losing hopes from the sinking dollar.
Gold players in the market have always appeared divided over the huge investment in gold bars as many still think that investment in gold is still very risky specially when prices are touching the roof.
"Just think of the profit for the investors as well as for general public who had bought the 10 tola gold bar at Rs70,000 last year, which is now currently available at over Rs91,000," Akhtar Khan said adding four years back it was available at Rs50,000.
Despite higher international rates, gold import is continued without any hindrance by three to four leading players. Around 10,000-15,000 tola of gold is being imported daily, he added.
He said that market people do hesitate in giving a real picture of the investors' interest and their buying euphoria in gold bars because of fear of becoming victim of harassment by the sales tax and income tax officials who would definitely probe jewellers accounts for higher sales.
"Actually, importers and exporters do not feel shy to give real picture. Local jewellers usually avoid to give real market picture," the APGMJA chief said. Chairman of Society Jewellers Welfare Association, Mohammad Saeed Qureishi said that investors were very much active in the markets in buying gold bars.
"Investors are heavily turning towards the gold investment these days because they feel investment in gold is more safer than stocks and property," he said. Gold is still considered a safe haven and best investment option for the long term purpose which is evident from the increase in its prices, he said adding that the return on gold investment is much attractive than return on investment in banks and saving schemes.
But, the Head of Research of Invest Capital and Securities, Mohammad Sohail, said that investors' main thrust to cash their luck is still towards property and stock markets rather than gold.
"Investment is definitely taking place in gold bars but the quantum is low if compared with other investment avenues," he said adding that property and stock market investors might have entered in gold investment in order to diversify their investment options. Besides, some minor investment is taking place in gold on the back of enough liquidity in the market.
"I think wide fluctuations in gold rates have been a negative factor in luring more investors towards the yellow metal," Mr Sohail said. The real rush in gold investment is likely to be witnessed after the start of its trading on the National Commodity Exchange, he said. Pakistan has no regular gold market and that is why the general public feel hesitant to invest in gold here.
Many market players think that in Pakistan gold is purchased primarily for consumption and not for investment purposes. Many jewellers, who do not import or export gold item, think that gold has never remained a top investment option for local investors owing to uncertainty in its prices.
