Traders said that global gold price had closed at $1,708 an ounce but the rate had been issued on the basis of $1,703 an ounce. — File Photo

KARACHI: Domestic gold rate hit a new record of Rs54,800 per tola (11.666 grams) on Monday as against its Saturday business at Rs53,680.

The world gold price hit $1,703 an ounce up from Saturday’s $1,664.

Traders said that global gold price had closed at $1,708 an ounce but the rate had been issued on the basis of $1,703 an ounce.

Global gold rates are hiking in the wake of recession fears after US credit rating downgrade by the S&P.

Traders at the Karachi Bullion Hall remained glued to their TV sets and monitors to maintain a constant link on phone with investors in the up-country since the start of trading at 3:30pm till 6.30pm.

They were keenly following the global price trends and assessing its possible impact on local rates.

The trading hall is situated at a densely-populated area of Mithadar with narrow lanes making passage of vehicles difficult and parking next to impossible.

The hall is too noisy as brokers and members keep on shouting, rendering any conversation difficult.

A number of traders (around 150 members and 200 brokers) gather everyday for trading in the afternoon at the Bullion Hall located at a compound covering hardly 240 yards.

The hall has three TV monitors reflecting price movement of international gold rates while some 18-19 small cubicles situated inside the hall also have TV sets and computer monitors.

The place is said to be over 60 years old. The Memon community has a dominating membership since its creation. Currently over 80 per cent brokers and members belong to the same community while others collectively constitute 20 per cent.

A non-member cannot enter the hall during trading session.

The hall is guarded by armed private security team.

The bustling bullion market with hundreds of brokers and members remain actively engaged in trading in absence of any official gold imports over the last one year in Pakistan raises many questions.

General Secretary of the Hall Mohammad Qasim Shikarpuri told Dawn that gold import is not feasible as yellow metal is under-priced in Pakistan and said to be selling Rs400 per tola cheaper in Karachi as compared to Dubai.

Gold is only imported when local rates exceed the prevailing rates in Dubai, he said.

To a query how gold demand is met in Pakistan when official import is suspended, he said there was enough gold available in the market as significant quantities were imported during the last five to six years before suspension of gold import.

He told Dawn that traders have to pay Rs700 per tola as duty that was Rs400 a month back.

At this rate of duty, gold import cannot be increased.

Currently some gold exporters are making gold import by paying Rs180-190 per tola as withholding tax for jewellery export purpose.

When asked about plans to shift venue of the Bullion Hall, he said the new generation of traders aspired for a more spacious and accessible location but the old guards wish to maintain the current hall space as head office if at all trading is shifted from Mithadar.

He said currently there was no plan to move the trading premises.

On transparency in bullion trading, he said rates are determined on the basis of international prices and traders and brokers remain in constant touch with their counterparts in the upcountry.

The Karachi Bullion Hall issues countrywide rates on a daily basis, but there is a slight difference of Rs20-25 per tola in the rates prevailing at Lahore, Faisalabad, Islamabad, Multan, etc.

Mohammad Qasim said currently investors linked with brokers and members are more active in buying and sale of gold.

“The Bullion Hall deals in physical trading of gold,” he added.

When asked how many of the market members have tried their luck at the Pakistan Mercantile Exchange (PMEX), he stated that so far none of their members or brokers had entered the PMEX.

He added that the management of PMEX had contacted them, but they were not inclined to oblige them.

According to Federal Bureau of Statistics (FBS), gold imports plunged to 2,816kg ($109.6 million) in July-June 2010-2011 as compared to 4,779 kg ($139 million) in the same period of last fiscal year.

Export of jewellery plunged to $404 million in July-June 2010-2011 as compared to $638 million in the corresponding period of last fiscal year.

Due to surging gold prices, investors continued to show interest in gold trading at PMEX as volume in gold trading in 2010-2011 reached Rs312.7 (1279718 lots) as compared to Rs57 billion (313886 lots) in 2009-2010.