KARACHI: Jewellery traders reported an increase of 20 per cent in sales since gold rates started falling significantly in the past two weeks.

The declining trend in domestic prices, backed by falling gold rates on the world markets, lured families purchasing for weddings or wishing to switch to the yellow metal to park their savings.

However, many buyers complained that the jewellery items in Pakistan are priced higher as compared to Dubai as traders were not passing on the full benefit of price fall to the customers.

Jewellers seem to have raised the ‘making’ and ‘designing’ cost unilaterally.

This year’s highest gold price was recorded on January 23 at Rs42,428 per 10-gram and Rs49,500 per tola based on global gold rate of $1,294 per ounce.

In May, the 10-gram and per tola rates dropped to Rs40,000 and Rs46,800 respectively while the world gold rate was $1,200 per ounce.

Based on the current world rate of $1,088 per ounce, the 10-gram and one tola gold are available at Rs37,628 and Rs43,900 respectively.

The new rates are appealing for many buyers who are now giving advance booking orders for gold jewellery or buying it on the spot.

Jewellers said gold buying picked up some 10 days before Eidul Fitr and the rush would continue gaining momentum till the peak wedding season.

“Sales have risen by at least 20pc as buyers are fascinated by falling prices coupled with the improvement in law and order situation,” former chairman All Pakistan Gem Merchant and Jewellers Association (APGMJA) Habib Ur Rahman said.

Like past trends, gold rates in Karachi remained higher as compared to Dubai.

“I think the price of per tola gold should not be more than Rs41,500 as Dubai gold is cheaper by at least Rs1,000-1,200 per tola,” Habib added.

“This is the right time to lift the precious metal,” APGMJA Chairman Saeed Mazhar Ali said.

He added that some people are also purchasing gold bars for investment purposes after pulling out their money from banks in view of continuous drop in interest rates in the last one year.

Low gold prices have lured many people to buy brand new jewellery varieties instead of using old jewellery for sale and exchange.

The trend of bringing old jewellery and gold still exists but is somewhat lower than last year.

President All Sindh Sarafa Association Haroon Chand too said that sales of jewellery have risen by 20-25pc since Ramazan.

Many buyers and investors are still waiting for further price drop in world markets, he claimed.

“Gold price in world markets may come down to $1,000 or below per ounce in case the US Federal Reserve increases the interest rates in September,” he anticipated.

Pakistan’s annual gold consumption is estimated at around 170 tonnes out of which approximately 90 tonnes are generated by recycling. Most of the demand is met through smuggling of gold from Dubai.

According to the Pakistan Bureau of Statistics (PBS),

gold imports in July-May 2014-15 dropped to 518 kg ($21 million) from 4,226kg ($175m) in the same period of preceding fiscal year.

APGMJA’s Ali said the government had reduced the withholding tax on import of gold to 1pc from 5pc in b udget 2015-16 while keeping the rate of duty at Rs2,500 per kg. However, the Association had suggested 0.5pc withholding tax in order to boost formal commercial imports of gold.

He added that commercial import of gold has been nil for the last seven years and the yellow metal is being imported by exporters of jewellery.

Published in Dawn, July 28th, 2015

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