The economic stability and the safety of assets become significant issues during political conflicts. Historical precedent demonstrates that tensions can severely disrupt financial structures, leading to sharp declines in currency values and investment devaluation. In the midst of such unpredictability, gold has consistently emerged as a reliable and enduring means of safeguarding wealth. Across various eras, its value has not only persisted but often flourished during times of warfare. If you’re an investor looking to analyze fluctuating trends of the bullion market, continue reading as we will examine the various elements influencing the 1 tola gold price in Pakistan this week
Last Week Gold Market Performance
The 1 tola gold price in Pakistan (24K) started the week at Rs 222000 and ended the week at Rs 222000.
1. U.S Economic Improvement will influence 1 tola gold price in Pakistan
Gold and Silver are experiencing excessive selling pressure and are nearing the support levels of $1900 for Gold and $22.00 for Silver. Experts are optimistic about a robust recovery stemming from this support level. However, if this doesn’t come as expected, there’s a possibility for medium-term risks to play their role.
The gold’s value has declined due to dollar due to strong US dollar and that has shifted investor’s sentiment away from this precious metal. Currently gold is trading at $1,910 per ounce, showing a decrease of $30 per ounce in just last one week. In the previous month, it came close to reaching $2,000 per ounce.
The expected interest rate hikes in September, coupled with a growing attraction towards riskier investment approaches, has led to a reduction in gold’s status as a safe haven asset. Despite fragile investor confidence, gold managed to remain above the $1,900 threshold since March this year. Nevertheless, economic signals within the United States, the globe’s largest economy, suggest consistent employment levels and a reduction in inflation. These factors might also influence 1 tola gold price in Pakistan.
2. Rupee Devaluation on cards
In the wake of the IMF deal and capital inflows from friendly nations, the Pakistani rupee initially gained ground against the US dollar. But it has since lost strength and returned to its pre-deal levels, fluctuating between Rs285 and Rs290 per dollar. Despite the State Bank’s foreign exchange reserves doubling within a month, these factors alone haven’t been sufficient to fortify the rupee. The relaxation of import restrictions has heightened the demand for the dollar, likely exerting pressure on the local currency.
Alongside, oil prices have risen, rising from below $75 /barrel to its current level of $84/barrel. Expert believe that prices might rise further due to high demand and limited supplies. And they also expect further devaluation in the Pakistan rupee that will increase the 1 tola gold price in Pakistan.
3. Pakistan has to increase rates to curb Inflation
The Sensitive Price Indicator (SPI) measuring short-term inflation maintained its upward journey, recording a year-on-year rise of 30.82 % for the week ending on August 10, 2023. On the other hand, week-on-week inflation rose by 0.69 %, and there are no indications of stopping this upward trend. This situation is causing concerns for both economists and consumers.
Among the 51 items included in the SPI basket, the prices of 29 products have risen, 5 have decreased, and 17 have remained unchanged in comparison to the previous week. According to Pakistani analysts, the prevailing high inflation is expected to drive investors and speculators towards the bullion market, leading to an increase in the 1 tola gold price in Pakistan.
4. Pakistani Economic Miseries
In addition to the ongoing efforts to rebound from the impacts of the COVID-19 pandemic, Pakistan is contending with the complexities of grappling with elevated inflation, concerns about debt sustainability, dependence on external financial support, and the significant fallout from devastating floods. These combined challenges are anticipated to bring about considerable and enduring economic effects. In the aftermath of Sri Lanka’s recent default crisis, there’s a growing question about whether Pakistan’s troubling economic and political situation could potentially propel it towards a similar outcome. In such a scenario, experts will delve into the developing economic crisis in Pakistan, focusing on strategies to effectively handle the risks associated with navigating the demanding period that lies ahead.
Moreover, Pakistan is also facing serious issues like currency devaluation, high inflation, political uncertainty, a small pool of qualified human resources, and a lack of reliable economic policies.
What to do?
Throughout history, gold’s enduring worth and stability have been underscored by its consistent role as a means of safeguarding wealth during periods of war. Gold has demonstrated its resilience against the challenges of conflict and unpredictability, offering both individuals and governments a dependable avenue for safeguarding their financial assets. While the nature of warfare and global dynamics has evolved over time, the enduring appeal of gold as a secure haven remains unshaken. In an age where financial systems are intricately connected and susceptible to diverse risks, gold’s status as an ageless form of wealth protection is likely to endure, serving as a tangible anchor during times of upheaval. Therefore, investors can take advantage of fluctuations in 1 tola gold price in Pakistan to maximize their investment gains.