4 factors affecting 1 tola gold price in Pakistan
Gold is one of the most popular investment options for Pakistanis since decades mainly due to its safe haven status. However, you have to be extremely careful while investing in this option as 1 tola gold price in Pakistan fluctuates often. Therefore, if you’re considering investing in gold in Pakistan, you’ve to keep an eye on the factors affecting its prices and value. If you are also planning to jump into world of gold investment but don’t know how to analyze its market. Then keep reading as we are going to discuss 4 most important factors affecting the 1 tola gold in Pkr. So, get yourself a cup of tea and let’s explore the lucrative realm of investing in gold in Pakistan!
Gold Market Performance last week
The 1 tola gold price in Pakistan (24K) started the week at Rs 236000 and ended the week at Rs 231700.
International gold demand and Supply
Despite a recent failed breakout attempt and a slight pullback, gold remains in close proximity to its most significant breakout in half a century and its most notable macro breakout since the S&P 500’s breakout in 2013.However, the interest of average investors and experts is more concentrated on the stock market’s recovery and the probability for a new bull market, even as the economy moves towards a slump.
As per latest research, Investments in gold and silver ETFs are presently trading at their lowest levels in last three years, as investors have ignored the recent US economic recovery. Bloomberg reporters have also observed that gold was far below the levels seen during the highs of 2022 and 2020.It is quite pertinent to note that a large number of stockholders and a continuous bullish sentiment are needed to start a long term bullish market. Right now, the situation is quite similar to the stock market at the start of the 1980s, with lots of parallels among the two.Similar to the stock market back then, gold is at the end of its second secular bear market in over 40 years. The first secular bear market for both assets occurred during the Great Depression.
The secular bear market for the S&P 500 from 1969 to 1982 lasted 13 years before a significant breakout led to a new secular bull market. Gold, on the other hand, has been in a secular bear market for 12 years, and a strong breakout above $2100 would pave the way for a new secular bull market.
Therefore, the bull market in the near future will increase the 1 tola gold price in Pakistan.
USD to PKR exchange rate
In the last week, the Pakistani rupee faced a depreciation of 0.19% against the US dollar in the inter-bank market, and reached 285.68 on Friday. But, the currency fluctuations in the open market that gathered attention.
The State Bank of Pakistan (SBP) announced last week that it permitted authorized foreign exchange dealers to buying US dollars from the inter-bank market for settling card-based cross-border transactions with international payment schemes like Visa and MasterCard.
Following this development, the US dollar rate in the open market decreased the next day. However, dealers mentioned that the supply of foreign currency remained limited, making the gain of nearly Rs20 somewhat insignificant.
Globally, the US dollar strengthened against major currencies in Asian trading due to a robust US jobs report. This led traders to anticipate longer periods of higher interest rates. The anticipated improvement in the US dollar value will increase the 1 tola gold price in Pakistan in the current week.
Inflation
According to the Pakistan bureau of statistics, country has faced a rise in its annual inflation rate reaching 37.97 % in the May. It is a new national record for the successive second month. This bureau announcement worsened the economic crisis in the Pakistan, since crucial bailout discussions with the International Monetary Fund (IMF) are kept at a standstill and there is a looming risk of debt default.
In April, the bureau reported that Pakistan’s CPI touched 36.5 %, making it the highest in the country as well as the entire South Asian region.
The bureau revealed in a latest statement that Pakistan’s inflation rate raised by 1.58 % on a month-on-month basis in May. This increase was accredited to various features including higher prices of vegetables, pulses, wheat, wheat flour, rice, eggs, chicken, as well as fuel and gas.
Pakistani Economy and Politics is uncertain
Investors are displaying a high level of caution, primarily due to concerns regarding political instability and challenging macroeconomic conditions, as reported by market sources. There are additional worries surrounding the potential implementation of new tax measures in the upcoming fiscal year 2024 budget, which has contributed to increased speculation in the market.
Looking ahead to the next week, political uncertainty is expected to directly impact the Pakistan stock market.
What to do?
In the time of recession, gold investment can be extremely profitable for an average investor. However, one should get an expert advice before jumping into this bandwagon as it can be extremely risky too.
If you have reservations about owning physical gold, opting for purchasing stocks in a gold mining company could present a more secure option.
If you have confidence in gold as a reliable hedge against inflation, exploring avenues such as investing in coins, bullion, or jewelry can lead you towards attaining wealth through taking advantage of fluctuations in the 1 tola gold price in Pakistan.