For generations, gold has retained its status as a highly prized asset. Even in today’s modern age, this perception remains unchanged. Gold continues to hold significant value, particularly as it tends to perform well in times of economic downturns and fluctuations. This enduring quality makes it one of the most favored forms of investment. Have you been contemplating investing in gold? If yes, then before that you have to recognize and keep an eye on the factors that affect 1 tola gold price in Pakistan. Please keep on reading as we will discuss the important factors influencing the precious metals in Pakistan this week.

Last Week’s Gold Market Performance

The 1 tola gold price in Pakistan (24K) started the week at Rs 232000 and ended the week at Rs 233500.

1.   Federal Reserve Policies will affect 1 tola gold price in Pakistan

Gold prices continued the upward trend from the previous session due to mixed U.S. labor data that proved expectations of the Federal Reserve maintaining its current interest rates right. This sentiment put pressure on the dollar and Treasury yields, leading to an increase in the value of gold as the prospect of fewer interest rate hikes reduced its opportunity cost.

Investors are closely observing the Chinese and U.S economic indicators to get any indication about expected future interest rate increases.

The recent gold price rise can be attributed to the perception that the Federal Reserve will not further increase interest rate hikes due to bad U.S. economic indicators. For instance: The unemployment rate rose in August 2023. Therefore, the majority of experts believe that the Federal Reserve will keep interest rates stable in the ongoing month. However, U.S. interest rates will remain at the same levels for an extended period due to record-high inflation in the country. Therefore, analysts believe that extra high-interest rates would offer an excellent opportunity for gold investors and will increase the 1 tola gold price in Pakistan.

2.   PKR Devaluation will influence Precious Metals Market

The recent Pakistani Rupee devaluation has increased inflation and forced the state bank to raise interest rates. The central bank increased rates to fight the damaging effects of the sharp rupee depreciation.

Latest statistics reveal that the U.S. dollar has gained considerable value against the Pakistani Rupee (PKR) in the last two weeks and is now trading at 302.50 PKR in the inter-bank market. Right now market experts believe that there is uncertainty about the local currency and devaluation might cross the range given by the International Monetary Fund (IMF).  According to insider sources, the IMF is anticipating a 20% PKR devaluation against the U.S. dollar in the Financial Year 2023-24. Here, in this situation, the 1 tola gold price in Pakistan is expected to increase more this week creating extra investing opportunities for investors.

3.   Pakistan must increase interest rates to curb mounting Inflation

Pakistan’s inflation rate was quite high in August reaching 27.4%. Experts believe that this rate depicts the severe challenges faced by the current government as it has to manage both depreciating currency and soaring inflation. They believe it is mainly due to the reforms done on the order of the IMF.

Reforms related to the IMF loan package include the removal of import restrictions and subsidies. Government authorities claim that inflation has shown some improvement as it was at its highest rate of 38.0% in May 2023. The latest statistical data by the Bureau of Statistics shows a marginal decline compared to July’s 28 % inflation rate though food inflation remains considerably high, standing at 38.5%.

Gold experts think that a high inflation rate will favor the market as we might see an increase in the 1 tola gold price in Pakistan.

4. The Troubling Economy will affect 1 Tola Gold Price in Pakistan

Pakistan is currently grappling with soaring inflation, a weakening currency, and alarmingly depleted foreign reserves. As Pakistan endeavors to confront these issues during a tumultuous period, it prompts significant inquiries regarding the underlying causes of these issues over the long term, the influence of political instability on them, and the appropriate economic strategies Pakistan should implement to tackle its challenges.

In addition, the nation is facing challenges related to political instability, especially following the detention of former Prime Minister Imran Khan. This situation could potentially trigger public protests by his party members, further escalating the level of political uncertainty. Consequently, increasing the 1 tola gold price in Pakistan.

Final Words

Similar to any investment, gold investments come with their advantages and disadvantages, experiencing both favorable and less favorable periods. Nevertheless, their advantages are truly compelling. From serving as a long-term investment to acting as a hedge against inflation, gold undoubtedly holds its value.

It is the best time to use various gold investment options available to create a personalized blend that suits your requirements by getting maximum out of fluctuations in 1 tola gold price in Pakistan.