Post Election Scenario and Pakistani Gold Market

 

Gold is considered as one of the most reliable investment options in Pakistan.The recent economic and political uncertainty has badly affected the social fabric of the country. Experts believe gold is the only ray of hope for investors in this grim business environment. They believe that 1 tola gold price in Pakistan will increase in upcoming months due to recessionary period. Therefore, by selecting gold presents a very good opportunity got everyone to earn handsome profits in upcoming years.

If you are gold investor and aiming to earn big, then keep reading as we will also identify factors that could affect 1 tola gold price in Pakistan in upcoming weeks.

Last Week Gold Market Performance

The 1 tola gold price in Pakistan (24K) started the week at Rs. 228000 and ended the week at Rs 228500.

1.   High U.S Inflation will affect Gold prices

According to experts of BofA Securities, gold prices might rise further in upcoming weeks. Right now the spot prices are hovering around 2180 $ per ounce mark and they are little below of the record high of $2,224.80. The recent rise is due to the Federal Reserve’s indication of potential rate cuts this year, and that has also weakened the U.S. dollar.

The BofA securities experts are quite optimistic about the gold as they believe that inflation might also rise in next few months and that is always a good time to invest in the bullion market. It is the time when safe haven assets like gold are much in demand. In addition to that, central bank worldwide are rapidly buying gold in last few years and that will increase the precious metal demand.

BofA Securities suggests that if more investors enter the market, it could drive gold prices towards the bank’s long-term upside projection of $2500-$2600 per ounce. Therefore, it is an ideal situation for Pakistani investors to take advantage of rising 1 tola gold price in the country.

2.   Appreciating Rupee will Affect 1 tola gold price in Pakistan

The Pakistani rupee has shown a slight improvement from its previous week closing and it is expected that it will improve more due to the approval of the IMF bailout package for the country this week.

The current financial year was quite encouraging for the currency as it has seen an overall appreciation of 7.6 rupees or 2.73% against the US dollar. On the other hand, the PKR’s performance against other important currencies was not encouraging.

Gold experts believe that this currency appreciation is not good for the bullion market and will decrease the 1 tola gold price in Pakistan. However, future holds good for bullion market as Pakistani rupee will certainly depreciate due to imports pressure in the upcoming week.

3.         Weak Pakistani Economy will be good for 1 Tola Gold price in Pakistan

Pakistan has obtained initial approval from the International Monetary Fund (IMF) for the disbursement of the final tranche under a $3 billion bailout program. Additionally, there is expressed interest in acquiring another loan program to sustain the economy of the country.

According to Porter, Pakistan’s economic and financial situation has shown improvement since the initial review. However, growth is projected to be modest this year, and inflation remains significantly higher than the target. Continuous policy adjustments and reform efforts are necessary to address the deep-rooted economic vulnerabilities in Pakistan.

Financial experts believe that Pakistan must prioritize structural reforms, invest in human capital, and diversify energy sources to unleash the nation’s economic potential.

This is a perfect time for the gold investors as they can easily take benefit from this scenario to increase their investments in gold during high inflation and economic uncertainty.

4.   State Bank Monetary Policy will Affect 1 Tola Gold Price in Pakistan

The State Bank of Pakistan (SBP) decided to keep its interest rates at the current levels for the sixth consecutive monetary policy committee meeting, even in the highly inflationary environment. The experts have opted to keep the key rate at the historically high level of 22%, a level set since its July meeting. This decision came as inflation moderated for the third consecutive month. The year-on-year inflation in last month stood at 22%, lasting significantly above the SBP’s target range of 5–7%, despite undergoing a decline. This marked the lowest inflation rate since June 2022, indicating a noteworthy decrease.

Trade experts believe that 1 tola gold price in Pakistan will increase in next few days due to high inflation in the country. Since, high inflation makes people to invest in the safe haven bullion market.

Final Words

The 1 tola gold price in Pakistan is rising since no confidence vote against Imran khan government and Ukraine war in 2022. Moreover, the current uncertain political and economic conditions in the country will increase gold prices. Therefore, experts believe that this is the best time for investors to maximize their investment returns in less time possible.