Factors affecting 1 tola gold price and its Investments in Pakistan this week
Gold is a popular form of investment in Pakistan as it is seen as a safe-haven asset that holds its value during economic instability and uncertainty. In Pakistan, gold is also considered as an essential part of cultural & religious traditions and is often purchased during festivals and weddings. Other than that investing in gold in Pakistan can also be done in various ways, including purchasing gold bars, coins, and jewelry. The 1 tola gold price in Pakistan can be affected by numerous things.
The 1 tola gold price in Pakistan (24K) started the week at Rs 195,000 and ended the week at Rs 200000. If you are an investor and looking to invest in the bullion market, then keep reading on as we will discuss some of most important factors affecting bullion market this week.
Global demand and supply
Gold prices have hit 11-month high by crossing the $ 1,900/ounce barrier and now heading towards long-term target of $2,000/ounce. The current price trend is due to the U.S. banking crisis that drove investors towards bullion market.
Experts believe that banking crisis is sending gold prices high and it would also affect the 1 tola gold price in Pakistan.
The international gold market started the week at $ 1916 /ounce and ended the week at the $ 1993/ounce. It indicates the increasing gold prices trend in the international market.
USD to PKR exchange rate
The US to PKR exchange rate has stabilized in previous week due to loan approved by China. According to the central bank of Pakistan, PKR lost value again on the last trading day. The PKR begun the week at Rs 279 and ended the week at Rs 281. Pakistan has to buy gold from the international market to meet its local demand. Therefore, appreciation in the dollar value increases the local bullion market value.
Experts in foreign exchange think that the dollar’s value may rise in the near future as a result of Pakistan’s deteriorating financial situation. And that may signal a favorable period for people interested in precious metals investment.
Inflation
High Inflation is still a major issue for the Pakistani economy as it is badly affecting purchasing power of normal citizens. The National Bureau of Statistics has revealed that local inflation increased by 0.96% during the week. It is a considerable increase from the preceding week and a staggering 45.64% rise annually.
The report showed that the price of 28 basic necessary products rose, while the price of 11 items declined. However ,on the other side 12 items price stayed at the previous level. The most affected portion of the population was having an income of 44,175 rupees /month, for which the rate of inflation was 47.97%.
It is a general observation that 1 tola gold price in Pakistan tend to increase with the rise in inflation rates. As, investors view gold as a hedge against inflation having capacity to help investors safeguard their purchasing power. When inflation rises, the value of fiat currencies like the PKR tends to decline. Experts expect an increase in gold demand as inflation is at peak level in Pakistan right now .Therefore, Pakistani investors must buy gold as a safe-haven option that can hold its value during economic insecurity.
Political and economic stability
Political and economic uncertainty is increasing gold demand in the country . PML-N led government is making every effort to delay upcoming Punjab and KPK provincial elections. Furthermore, government machinery is spending millions of rupees of tax payers to arrest former PM Imran khan and that is creating further instability. However, experts believe that PML-N government should play a role in solving the economic issues first as rising prices have burdened normal citizens.
On the other hand, IMF is not ready to give Pakistan an easy money and wants ‘friendly” countries to fulfill their obligations to finance the cash-strapped country before release of $6.5 billion bailout package. Therefore, Pakistan economy is now totally dependent on expected package from friendly gulf countries.
The macroeconomic situation is quite precarious and international magazines such as Bloomberg expect the economy to contract by 2.2% in the financial year 2022-23 and forex exchange reserves are hovering around $ 4 billion. Here, economic and political uncertainty will surely push 1 tola gold price in Pakistan further upwards in the domestic market.
What to do?
Investors must analyze market environment before making any kind of gold investment. For instance : Right now it is beneficial to hold precious metals for long term as 1 tola gold price in Pakistanwill increase further this year .Therefore, we can say that gold is a good investment option but your choice of gold investment will depend on your long term financial objectives.