New Pakistani Government and Gold Prices in Pakistan

 

In a financial climate where the value of conventional currencies might diminish over time, gold serves as a means to safeguard your wealth. Therefore, by choosing to invest in gold presently, you’re taking a strategic step to shield your assets from the detrimental impacts of inflation, all the while aiming for the long-term preservation of wealth.

If you are gold investor, then keep reading as we will also identify factors that could affect 1 tola gold price in Pakistan.

Last Week Gold Market Performance

The 1 tola gold price in Pakistan (24K) started the week at Rs. 221100 and ended the week at Rs 221000.

1.   Economic Data will affect 1 tola gold price in Pakistan

Gold reached a historic high on Tuesday, boosted by increasing expectations of monetary easing in the U.S. and ongoing geopolitical tensions, which have encouraged momentum-driven funds to engage in trading activities, potentially driving the precious metal even higher.

Supporting this momentum is a strong fundamental backdrop, including robust physical demand in Asia, central bank purchases, and gold’s traditional status as a safe-haven asset. Central banks have been consistently purchasing gold for eight consecutive months.

As of 1540 GMT on tuesday, spot gold increased by 0.8% to $2,130.79 per troy ounce, hitting a record high of $2,141.59.

Analyst Rhona O’Connell from StoneX noted that the upward movement in gold became self-perpetuating, triggering stops and attracting momentum funds. From a technical perspective, there may still be room for gold to rise further towards $2,180, according to a Fibonacci projection level.

The upcoming days, especially with critical economic data releases and testimonies from Federal Reserve Chair Jerome Powell, will be crucial in determining whether gold can sustain its current trajectory or experience a consolidation period, according to Alexander Zumpfe, a senior precious metals trader at Heraeus.

Independent analyst Ross Norman predicts that gold will reach $2,300 this year, anticipating rate cuts by the Federal Reserve. Although this might not happen in the immediate future, it’s likely within the next six months.

This is the situation in which 1 tola gold price in Pakistan can further escalate.

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

During the past week, the rupee saw a slight increase, gaining Re0.17 or 0.06% against the US dollar in the inter-bank market. According to the State Bank of Pakistan (SBP), the domestic currency ended the week at a level of 279.19 against the US dollar.

Gold experts believe that this currency appreciation is bad for the bullion market and will increase the 1 tola gold price in Pakistan. However,the future is good for bullion market as Pakistani rupee will depreciate in near future.

3.      Fragile Pakistani Economy and High inflation can be good for 1 Tola Gold price in Pakistan

Moody international rating agency has analyzed the Pakistani economy and hoped that its government will successfully reduce its external vulnerable risks and liquidity in upcoming months .It is important as it will improve country’s credit to stable.

Right now Moody has kept Pakistani ranking at ‘Caa3’ for long-term issuer rating having a stable outlook.

In the meantime, the State Bank of Pakistan (SBP) revealed that its forex reserves have decreased by $63 million last week, as currently reserves stand at $7.95 billion as of February 23, 2024. The total forex reserves amounted to $13.04 billion, including commercial banks having net foreign reserves of $5.09 billion.

Moreover, Pakistan is also facing default risks as it has to pay its external liabilities. Analysts believe there is some stability after Shehbaz Sharif was successfully elected as the 24th Prime Minister of Pakistan getting 201 votes from the Pakistan National Assembly. However, there is still political uncertainty as PTI has decided to challenge the election results in the court.

This is an ideal situation for the gold investors as they can easily take advantage of this scenario to increase their investments in gold during high inflation and political uncertainty.

4.   High Inflation Will Increase 1 Tola Gold Price in Pakistan

The foremost task before the PML-N led coalition government is to undertake tough measures to put the economy on a stable course. This will not be easy as majority of the people are already hard pressed, with inflation touching 23.1% in February 2024, but these corrective measures are unavoidable if Pakistan has to recover from its slide.

What is needed is a major transformational change in governance in which people’s interests and well-being take precedence over any other considerations. To reduce the hardships of the lower income groups the government will have to arrange subsidies in food items and support prices of products of farmers with small land holdings.

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

1 tola gold price in Pakistan have showed an increase in last few years due to uncertain political and economic climate. Gold offers a range of unique benefits to investors, many of which are particularly relevant in the current economic environment of high inflation. It has increased from 129,000 to well above 200,000 Pakistani Rupees in just last 2 years.

However, you must keep in mind that it is extremely important to keep in mind your risk tolerance before investing in the bullion market .Moreover, you must have an expert advice from an experienced financial advisor before jumping into the bandwagon.