KARACHI: As all official imports of raw materials and finished goods are made on prevailing interbank dollar rates, consumers are forced to pay higher prices for gold and its related products as daily bullion rates are calculated on higher open market exchange rates.

More surprisingly, official gold imports have been suspended for the last many years as claimed by bullion traders due to the paucity of dollars.

The local yellow metal prices have been rising due to a host of reasons mainly a volatile exchange rate amid falling foreign exchange reserves which triggered renewed buying of gold by investors and businessmen owing to growing fears of the country’s default and a bullish trend on the world market.

The All Sindh Saraf Jewellers Association (ASSJA) on Monday, the first trading day of 2023, surprised the market by tossing the one-tola and 10-gram rates to a new all-time high of Rs187,200 and Rs160,494 (a rise of Rs3,300 and Rs2,829) despite no change in the world gold rate which remained steady at $1,824 per ounce.

Mohammad Arshad, a jewellery maker in Saddar area, confirmed to Dawn that gold rates were being fixed based on the open market dollar rate.

The greenback is available at Rs255-260 in the open market as against Rs226 in the interbank.

He said the federal government should devise a yardstick for fixing the daily local gold rate so that consumers could not pay higher rates.

When asked from which sources the market meets gold demand when imports are on halt, Mr Arshad said sales are mainly driven by the supply of old jewellery and gold bars from the consumers.

While confirming that local gold rates are fixed on the open market dollar price, ASSJA President Haroon Rashid Chand could not give a clear reason why this practice had been in vogue.

Answering a question he said the association has loosened its control on issuance and fixing gold rates after the entry of speculators and businessmen.

He also agreed that no official import of gold is being done and demand is met through the arrival of gold from illegal channels.

A note by Topline Securities said that local sarafa/bullion market gold rallied in line with an increase in the dollar rate in the black market. Currently, gold is valued at black market parity rather than the official rate which is 10pc lower.

The gold rate in Pakistan is higher by Rs6,500 per tola than in Dubai, Mr Chand said.

Published in Dawn, january 3th, 2023