National Commodities Exchange to start gold trading this month

KARACHI (December 03 2002) : The National Commodities Exchange Limited (NCEL), which will start trading in gold during the current month, will be a step towards a more sophisticated investment.

According to World Gold Council (WGC), as compared to India, the demand of gold in Pakistan continues to rise.

The WGC said, during the third quarter of the current year, gold demand in Pakistan was up by 32 percent, higher than the level a year ago.

Gold prices in Pak rupee stabilised after climbing through much of the year, while the economy remained relatively buoyant.

The liberalisation of the Pakistan market (gold import no longer being restricted to licensed importers) will help improve the market in the longer run.

The immediate causes of the fall in gold demand, in tonnage terms, during the first nine months of 2002 were the rising prices and weak world economy, the reduction in mining company hedged books during the period being an additional factor. All these contributed to reduced levels of gold supply and demand, the WGC said in its quarterly review, 'Gold Demand Trend'.

The WGC said that the adverse factors affecting gold demand in the first half of 2002 had a reduced impact in the third quarter. Gold demand in third quarter remained below year's earlier levels in tonnage terms but the rate of decline was halved to 7 percent from 14 percent experienced in the first half-year. In dollar terms, demand was 6 percent higher than a year earlier and the fall in the dollar value of gold offtake, which started in 1997, appeared to have halted.

The year-on-year fall in jewellery demand, in tonnage terms, therefore, slowed sharply to 4 percent, compared to 17 percent during the first half-year. In dollar terms, third quarter demand was 10 percent higher than a year earlier.

In third quarter, jewellery purchases, at 611 tonnes, accounted for the major part of overall demand with the balance made up of 83 tonnes of retail investment, 69 tonnes for industrial purchases and 17 tonnes for dental use.

Industrial demand in third quarter was 7 percent higher in tonnage terms (23 percent in dollar terms) than a year earlier.

Net retail investment tonnage was 32 percent more than third quarter 2001 but this was due to the exceptional level of gold buying in the immediate aftermath of September 11, 2001.

Offtake in this category in third quarter 2002 was higher than in other recent quarters.

“Demand remained weak in the tired quarter,” said James Burton, chief executive officer of the World Gold Council. “The WGC will continue its role of supporting the global market for gold in all its traditional forms.”

World gold demand (excluding institutional investment) was 780 tonnes in the third quarter 2002, 7 percent lower, as compared to the same period of 2001. This brought demand in the first three quarters to 2,332 tonnes, 12 percent lower than in the corresponding period of 2001.

The total value of gold demand in third quarter was 7.9 billion dollars. This was 6 percent higher than a year earlier despite the 7 percent fall in quantity, reflecting the increase in the dollar price which averaged 314 dollars per once in the third quarter compared to 274 dollars for the third quarter of 2001.

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