Import of gold from Dubai
came to a halt as prices go lower by Rs 250 per 10 gram
By Syed M. Aslam
Oct 18 - 24, 1999
The international volatility took its toll on the Karachi Sarafa
(bullion) market which remained closed for almost two weeks till October 8.
Talking to PAGE, the secretary of Karachi Saraf and Jewellers Group,
Haji Muhmmad Farooq said that at present gold imports from Dubai has stopped altogether as
gold price in Karachi is cheaper by Rs 250 per tola (11.54 grams). Today the gold is
traded at Rs 6,400/tola in Karachi a compared to Rs 6,650 per tola in Dubai, he told PAGE
on Saturday October 16.
Who would like to import gold at Rs 6,650 per tola when it is already
available at a price less by Rs 250 in Karachi, he asked.
The international price of gold has remained much volatile since the
beginning of last month and continues till this week. Gold traded narrowly between
$254-255 per ounce in New York on September 6. It jumped to $ 321.50 on the afternoon on
Friday, October 8 near to two-year high of $ 340 per ounce on October 5, before falling
back to $ 325.50 per ounce the same afternoon.
The volatility in the international gold prices spilled over to the
Karachi bullion market which has witnessed a roller-coaster ride. The prices kept on
changing for days, resulting in abrupt turnaround.
When trading resumed at the Karachi bullion market after a closure of
almost two weeks on October 8 the gold was quoted at Rs 5,298 per ten grams. This was Rs
566 more than the price last quoted on September 25 when it was Rs 4,732 per 10 gram.
Gold prices once again surged by Rs 111 per 10 gram in the Karachi
bullion market when the market opened on Thursday after the closure on Wednesday October
13, the day after the Nawaz Sharif government was dismissed by the army. 24-karat gold was
quoted at Rs 5,555 per 10 gram on October 14 as compared to Rs 5,444 on Tuesday.
As the international prices on October 14 rose to $ 323 per ounce
suspending all gold imports from Dubai into the country. On Friday October 15 gold was
traded at Rs 5,504 per 10 gram in Karachi which went down by Rs 18 to Rs 5,486 per 10 gram
on Saturday, a bullion dealer told PAGE.
Commenting on the ongoing crisis in the local bullion market a dealer
said that the local market has not fully absorbed the pinch of boom in the international
prices as it currently lacks presence of buyers.
International Gold Market commentary
For the Week from Monday September 6 to Friday Sept. 10
New York: With the market closed for the Labour Day Holiday, trading
activity remained subdued on Monday. Gold traded narrowly between $ 254-255 an ounce.
Media reports based on leaked information about an alternative to open
market gold sales as the mechanism for financing the IMFs contribution to debt
relief caused a flurry of activities and lifted prices above $ 256/ounce on Tuesday.
On Wednesday the quotations edged up to $ 256.40/ounce. They touched $
257 on Thursday primarily due to a weakening dollar and the endorsement of IMF plan by two
influential US legislators. The prices thinned on Friday and gold drifted back to $
256/ounce before closing at $256.30/ounce.
Middle East and Asia: Physical demand for gold in the Middle East and
Asia continues to increase, improving both the economic recovery and low international
prices. In Dubai, gold imports in July totaled 31.34 tonnes, up from 24.38 tonnes a year
earlier. Taiwans gold imports more than doubled in August to 9.03 tonnes as compared
to the previous year. Gold imports through Indias western city of Ahmedabad rose
sharply to 25.27 tonnes in August from 13.88 tonnes during the comparative period last
For the Week from Monday October 4 to Friday October 8
This was another volatile week for gold. International dealings spread
between $2-3 reflecting the high degree of nervousness among market players and the high
levels of price volatility.
Gold started the week higher at $ 311.75/ounce and edged steadily
higher throughout the day. The price rise gained renewed momentum during Asian trading
hours as both short-covering from Australia and fund buying increased. The buying
continued in Europe on Tuesday and after fixing at $326.25/ounce in the morning, the
quotations rose up to a two-year high of $ 340/ounce before falling back to profit taking
to $ 325.50/ounce in the afternoon.
Gold ranged above $325/ounce on Wednesday morning then slipped back
after the US opening to an afternoon fixing of $ 318.25. It bounced back to $ 323 level
later in the day.
Similar moves were seen on Thursday and the view that gold was
beginning to consolidate between $315-325 gained some acceptance.
On Friday support near the $ 315 level was tested and quotations
subsequently went up to $325/ounce before closing at $ 319.50-321.50 in New York.
Canadas finance department announced that the central bank sold
136,000 ounces (4.2 tonnes) of gold during September as part of its long-standing sales
programme, reducing the countrys gold holdings to 1.8 million ounces (56
Source: World Gold Council