In Tehran's open market the USD was traded for 118,000 rials, down from Wednesday's 123,500 rials. The benchmark Bahar Azadi gold coin was traded for slightly above 40 million rials in midday trading, down from Wednesday's 40.3 million rials.
According to Mohammad Kashtiaray, president of the specialized gold commission at Iran Chamber of Guilds, the coin lost 5% compared to last week.
"The volume of deals has dropped due to lower demand for gold and now there are more sellers in the market than buyers," Kashtiaray told the Financial Tribune.
The gold coin bubble (domestic price compared to global value) which became bigger last summer after the US announced its withdrawal from the Iran nuclear deal is now 700,000 rials, Kashtiaray said. A week earlier it was 5 million rials.
"Drop in gold prices comes despite the fact that the precious metal gained $15 since last week and reached $1,318 in the international market. In Iran prices have fallen thanks to measures by the central bank and developments in EU-Iran relations," Kashtiaray said.
French, German and UK foreign ministers announced the creation of 'INSTEX' on Thursday which they said was a new mechanism for "facilitating legitimate trade with Iran in order to preserve the Iran nuclear deal."
Releasing a joint statement, the E3 ministers Jean-Yves Le Drian of France), Heiko Maas of Germany and Jeremy Hunt of the UK said the measure had been announced in accordance with their resolute commitment and continued efforts to preserve the Joint Comprehensive Plan of Action (JCPOA) endorsed by the UN Security Council. INSTEX stands for Instrument for Supporting Trade Exchanges).
The move was long overdue as it was originally planned to be launched last November and Iranian officials had often expressed frustration over the delays.
Kashtiaray noted that any measure that would accelerate the flow of funds and hard currency would be a boon to markets and INSTEX is a measure in that direction. "If INSTEX is finalized it will help improve Iran-Europe trade and that is good for markets."
The stockmarket however was unimpressed on Saturday with the Tehran Stock Exchange main index losing 439.52 points or 0.27%. Tehran stocks ignored positive news on the global scene as commodities are on the rise and US-China trade talks are making headway.
"The point is that ant short-term effects on markets are psychological and the real effects will emerge in the long-term," Shahin Cheraghi, a market analyst said.