Let’s talk about everyone’s favourite shiny metal – gold! If you’re considering investing in gold in Pakistan, you’ve come to the right place. Gold has always been a popular investment option in the country, with a rich history of being treasured and sought after. Whether you’re a seasoned investor or just dipping your toes into the world of investments, gold can be a great addition to your portfolio. In this informal guide, we’ll explore how 1 tola gold price in Pakistan is affected by various factors. So, grab a cup of tea and let’s dive into the golden world of gold investment 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 236400.
Global demand and supply
Last week, the price of gold reached its lowest point in two months. However, there are indications of recovery on Monday, with the price per Troy ounce of gold reaching $1962.00 USD. Suppose there is an official announcement soon regarding an agreement to increase the US public debt limit. In that case, the gold value might rise due to the expected decrease in the value of the USD.
Despite the current market conditions characterized by stress and risk aversion, gold has not performed well as a protective asset. The focus remains on the US, its budget, and its currency. Limited physical demand for gold provides little support to its price.
From a technical analysis perspective, on the H4 timeframe, the XAU/USD pair is forming a wide consolidation range around 1952.72. It is expected that the price will further decline to 1921.10. Once this level is reached, there is a possibility of a price increase towards 1984.00. As a result, this will impact 1 tola gold price in Pakistan.
USD to PKR exchange rate
The Pakistani Rupee (PKR) experienced a decline of 27 paisa against the US Dollar in the interbank foreign exchange market on Monday. This drop was caused by an increased demand for the dollar, mainly driven by import payments at the start of the week.
By the end of the week, the Pakistani currency concluded at PKR 285.42, which indicates a decrease of 27 paisas compared to the previous closing rate of PKR 285.15 on May 26, 2023. This devaluation of the Pakistani rupee will result in a higher 1 tola gold price in Pakistan.
In recent weeks, the Pakistani Rupee has been under significant pressure due to limited inflows and an uncertain political environment. It reached an all-time low of PKR 298.93 against the US dollar on May 11, 2023. The presence of political and economic uncertainties has presented challenges for the rupee, leading to a decline in investor confidence and a negative impact on its value. Consequently, it will affect the 1 tola gold price in Pakistan.
The estimated average inflation rate for the period spanning from July 2022 to May 2023 is 28.95%, indicating a significant rise compared to the 11.25% recorded in the same period of the previous fiscal year. This price increase is mainly causing inflation surges across various sectors, including food, transportation, housing, restaurants and hotels, household equipment, recreation and culture, clothing and footwear, as well as miscellaneous items.
In terms of month-on-month (MoM) changes, the Consumer Price Index (CPI) will experience a 1.09% increase in the coming days. As per SPI data, a high level of inflation is driving this upward trend in the food sector, particularly notable in the prices of poultry products, potatoes, and gur. Furthermore, the household equipment index might rise by 1.3% on a MoM basis, while clothing prices, especially footwear, will see an 11% MoM increase. On the other hand, the housing and transportation indices would decline surely to month-on-month changes.
Political and economic Uncertainty
Concerns arose about the potential introduction of new tax measures in the fiscal year 2024 budget, leading to further speculation in the market. Both the government and officials from the International Monetary Fund (IMF) maintained their commitment to ongoing negotiations. In response to a proposal by the reforms commission to impose taxes on distributable reserves of listed and non-listed companies, listed companies began issuing notices about raising their share capital.
Moreover, the State Bank experienced a decrease of $119 million in foreign exchange reserves, bringing the total to $4.2 billion. This amount would only be enough to cover imports for approximately one month.
On the other hand, the current political environment is facing extreme level of uncertainty as the PML-N-led government continues to violate human rights and detain opposition political workers without substantial justification. Given the circumstances, it is vital for the federal government to exhibit maturity and proactively seek political resolutions to avert the country from plunging into a state of chaos or anarchy.
What to do?
To wrap things up, investing in gold in Pakistan can be an exciting and potentially profitable endeavour. With its cultural significance and historical value, gold holds a special place in the hearts of Pakistanis. Whether you’re looking for a hedge against economic uncertainty, a tangible asset to diversify your portfolio, or simply a piece of luxury to cherish, gold fulfils your requirements. Remember to do your research, and stay updated on market trends, and factors affecting 1 tola gold price in Pakistan. And always keep in mind that investing, while rewarding, also comes with risks. So, go ahead, explore the glittering world of gold investment in Pakistan, and might your investments shine bright like gold