Gold stands out as a reliable and safe investment in a market characterized by volatility and unpredictability. Its historical significance lies in its potential to serve as a store of value and a safeguard against economic instability. As one of the most effective investment strategies, gold offers a means to navigate challenging economic conditions.If you are also a gold investor, then keep reading as we will examine the factors that impact 1 tola gold price in Pakistan.

Last Week Gold Market Performance

The 1 tola gold price in Pakistan (24K) started the week at Rs. 210,000 and ended the week at Rs 215600.

1.   Geo-Economic Will Play Their Part

Gold prices experienced a slight increase in Asian markets, propelled by strong labor market data that created uncertainty regarding the trajectory of U.S. interest rates.

The precious metal had a robust surge earlier in the week amid growing optimism that the Federal Reserve had concluded its current cycle of interest rate hikes, briefly surpassing the $2000 an ounce mark on Tuesday. However, the U.S. labor market’s resilience and hawkish signals from the recent Fed meeting minutes halted the upward momentum of gold. Additionally, a rebound in the dollar from nearly three-month lows exerted downward pressure on bullion prices.

The spot gold saw a 0.2% increase, reaching $1,994.43 per ounce, while gold futures expiring in December rose by 0.1% to $1,995.20 per ounce. Trading volumes for gold were somewhat constrained due to market holidays in the U.S. and Japan during the week.

The pause in the gold rally followed the release of data on Wednesday, revealing that U.S. jobless claims declined less than anticipated in the previous week, suggesting that the labor market was not cooling as rapidly as previously thought. Although a robust labor market could maintain a relatively hawkish stance from the Fed in the short term, there was still uncertainty about when the central bank might commence rate trimming in 2024.

Despite the Fed’s continued emphasis on maintaining higher interest rates for a prolonged period, gold prices are expected to have limited upside in the coming months, given that elevated rates increase the opportunity cost of investing in bullion. However, any indications of deteriorating global economic conditions could spur some safe-haven demand for gold.

The above mentioned geo-economic factors could eventually put pressure on gold prices and is likely to decrease the 1 tola gold price in Pakistan too.

2.   PKR Devaluation will Increase 1 tola gold price in Pakistan

Pakistan is expected to request an exemption from the International Monetary Fund (IMF) for breaching the requirement of limiting the gap between inter-bank and open market currency rates. This comes as the IMF revises its estimate for the average dollar price to be around Rs300, an improvement from the previous assumption of Rs305.2 to a dollar in July. According to well-informed sources, the IMF now anticipates the average value of the U.S. currency to be slightly below Rs300 by June of the following year. Experts believe that this expected currency devaluation will put extra pressure on the 1 tola gold price in Pakistan increasing its price.

3.    Economic Stability is Good for Pakistan

Pakistan is still facing multiple economic and political challenges. Looking beyond the current IMF program, there are concerns about the scale and sources of financing needed for Pakistan’s substantial external payments. The country is obligated to repay $77 billion in external debt from 2023 to 2026, a considerable amount for an economy with a GDP of $350 billion. The journey to 2028 will be arduous. To meet an ambitious growth target of 5 percent, it will be essential to have unwavering political commitment, maintain policy reforms consistently, and devise innovative solutions aimed at boosting productivity, revenue, and financing. It is crucial for Pakistan to urgently transition its economic and financial policy approach from mere mitigation to establishing enduring resilience. Therefore, it is quite important to hold a free and fair election in 2024.

Gold experts think that current economic stability will favor the market as we might affect the 1 tola gold price in Pakistan.

4.   High Inflation Good for 1 tola gold price in Pakistan

According to official data reported by Dawn, a Pakistani English-language newspaper, the recent surge in gas prices has led to an annual short-term inflation rate exceeding 40 percent in Pakistan, marking the first time this has occurred in over four months. The Pakistan Bureau of Statistics (PBS) indicated that the inflation figure reached 41.9 percent for the week ending November 16, primarily attributed to a remarkable 1,100 percent increase in gas charges compared to the same period the previous year. Notably, other items that experienced substantial price hikes included cigarettes (94.5 percent), wheat flour (86.4 percent), chilli powder (81.7 percent), broken basmati rice (76.7 percent), garlic (63.6 percent), IRRI 6/9 rice (61.9 percent), tea (54.6 percent), gur (51 percent), and sugar (50 percent).

On the flip side, certain commodities saw a decline in prices, with onions registering a notable decrease of 36.2 percent year-on-year, followed by tomatoes (-14 percent), mustard oil (-3.95 percent), vegetable ghee (-2 percent), and pulse gram (-0.5 percent), as per information provided by Dawn.

Experts believe that 1 tola gold price in Pakistan could increase in next few weeks due to high inflation.

Final Words

People always considered gold as unique and priceless. Apart from improving the diversification of a portfolio, investing in gold currently can also serve as protection against both inflation and deflation.

The most straightforward method to invest in gold is by engaging in the stock market, allowing you to invest in the stocks of companies involved in gold mining. Opting for gold bullion investment does not provide the same level of leverage as investing in stocks of gold-mining companies.

In this situation, it’s essential to consult with advisors who can help you navigate the variations in 1 tola gold price in Pakistan. The fluctuations have seen a significant increase, rising from 129,000 to well over 200,000 Pakistani Rupees per tola since March 2022.