4 things Influencing 1 tola gold price in Pakistan

 

There are various compelling reasons to consider investing in gold. One important reason is its historical status as a dependable protection against inflation, a concern that has continued over the last two years. Additionally, gold serves as an effective diversification tool for your investment portfolio. By spreading your wealth across different asset classes, shield your investments in case other sectors experience a downturn. 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’s Gold Market Performance

The 1 tola gold price in Pakistan (24K) started the week at Rs 206000 and ended the week at Rs 206500.

1.   Gold Prices Rose Due to Geo-Political Tension in Gulf Region

Gold prices rose recently due to the growing geopolitical instability and rising political tensions in the Gulf region. It is an ideal situation for the gold making it an attractive option for investors searching for a safe haven. The price of spot gold (XAU/USD) has been steadily increasing, while gold futures have remained relatively stable, reflecting the intricate dynamics of the current market sentiment.

Investors are keeping a close eye on the mounting Israel-Hamas conflict, which can disturb the global supply chains and intensify into a larger crisis. This heightened focus on global uncertainties has contributed to gold’s attractiveness as a safer investment. Over the past two weeks, despite the presence of high yields in the market, gold has experienced a substantial surge of approximately 9%, reaching its highest point in five months.

Furthermore, the strategic decision made by Bill Ackman to cover his short bond position due to concerns related to geopolitical risks has led to a decrease in U.S. Treasury yields. This development has provided support for the upward movement of gold prices. Presently, the daily price of gold (XAU/USD) stands at 1976.28, trading above its 200-day and 50-day moving averages, as well as the primary support level at 1930.64. This reaffirms the prevailing bullish market sentiment for gold. The above-mentioned political trends would eventually put pressure on gold prices and are likely to increase the 1 tola gold price in Pakistan too.

2.   Devaluation  of  the Domestic Currency will increase 1 tola gold price in Pakistan

According to currency market reports, the rupee closed at Rs 281.5 for selling and 278.5 for buying on Tuesday. In comparison, on Monday, the local unit had ended the day at 281 for selling and 278 for buying. Simultaneously, in the inter-bank market on Tuesday, the rupee concluded at the 279.43 level against the US dollar, experiencing a decrease of Re0.31.

It is essential for the gap between rates in the inter-bank and open markets to be less than 1.25%, according to one of the structural benchmarks established by the International Monetary Fund (IMF). Pakistani authorities are anticipated to hold discussions with the IMF during the forthcoming review of the $3-billion loan program in November. Experts believe that this currency devaluation will put extra pressure on the 1 tola gold price in Pakistan increasing its price.

3.      High inflation will badly Affect Pakistan’s Economy

Pakistan experienced an all-time high inflation in September 2023, reaching its highest point in four months at 31.4%, up from 27.4% in the previous month. This increase was mainly due to soaring fuel and energy prices. Inflation has consistently remained in the double digits since November 2021. The most significant price increases were observed in housing, water, electricity, gas, and fuels, which rose by 29.7% compared to 6.3% previously. Additionally, costs went up for transport (31.3% compared to 23%), clothing and footwear (20.6% compared to 18.5%), and health (25.3% compared to 22.6%). However, food inflation saw the smallest increase in ten months, rising to 33.1% from 38.5% previously. Gold experts think that a high inflation rate will help the bullion market as we may see a rise in the 1 tola gold price in Pakistan.

4. The Political Uncertainty will negatively Pakistani Economy 

The situation deteriorated in the fiscal year 2022-23 due to factors such as floods, delays in completing the 9th review of the International Monetary Fund’s Extended Fund Facility program, ongoing domestic uncertainties, and stricter global financial conditions.

In particular, the severe monsoon floods had a significant negative impact on economic activities. These floods not only fueled inflationary pressures but also put additional stress on the country’s external accounts. Furthermore, the fiscal imbalance widened due to the spending on relief efforts, worsening the economic situation.

The combined effect of these events significantly weakened the macroeconomic performance of the South Asian country during the fiscal year 2022-23. The economic situation is still far from better and needs a reliable long-term economic policy. Experts believe that the 1 tola gold price in Pakistan could increase in the next few weeks due to economic and political uncertainty.

Final Words

Inflation gradually diminishes the actual worth of a currency. In simpler terms, the purchasing power of a dollar today is lower than it was a decade ago. However, gold offers a means of safeguarding the genuine value of your wealth against inflation.

However, there are various methods to invest in gold. You can opt for physical gold bars and bullion or explore gold ETFs (Exchange-Traded Funds). Another option is opening a gold IRA, a valuable tool for saving for retirement. Unsure about the right gold investment choice for your specific needs?

In this situation, you must consult advisors who can help you to navigate the fluctuations in 1 tola gold price in Pakistan, which has seen a significant increase from 129,000 to over 200,000 Pakistani Rupees per tola since March 2022.