Gold has recently gained significant attention as an investment and rightfully so. Besides its exclusive benefits for investors, the 1 tola gold price in Pakistan experienced a rising trend during last 2 years. Pakistani investors became extremely interested when it crossed 200000 Rs per tola. It is forcing maximum investors to take in gold in their portfolios and contribute to its rising value.
If you are gold investor, then keep reading as we will also analyze factors that could impact 1 tola gold price in Pakistan.
Last Week Gold Market Performance
The 1 tola gold price in Pakistan (24K) started the week at Rs. 218,200 and ended the week at Rs 216130.
1. Federal Reserve Policy Will Play Its Role
Gold prices continued dropping in Asian markets in last week due to the expected aggressive stance on interest rates from Federal Reserve officials’ driven mistrust about potential rate cuts by the central bank. In addition to that, a strong dollar fueled the sliding pressure on prices.
The falling gold prices were influenced by recent comments from Fed Governor Christopher Waller. Waller expressing a careful approach to cut rates and recommended that the present growing US. Economy could delay any potential decreases. These comments rose the dollar to a one-month high level and led to a significant rise in Treasury yields, with the 10-year rate surpassing the 4% threshold.
The anticipation of sustained higher U.S. interest rates largely counteracted the recent demand for gold as a safe-haven asset. As a result, traders shifted away from gold and towards the dollar.
Furthermore, a growing preference for safe-haven assets, particularly in response to indications suggesting a potential escalation in the Israel-Hamas conflict, might contribute to an increase in the value of gold as a secure investment.
The described economic conditions are expected to increase US gold prices and could eventually contributing to rising 1 tola gold price in Pakistan. Hence, it appears to be an opportune moment for investors to consider allocating their funds in the bullion market.
2. PKR Appreciation will Affect 1 tola gold price in Pakistan
The Pakistani Rupee gained 14 paisa against the US Dollar recently and closed at Rs280.10 compared to the previous day’s closing of Rs280.24. Though, as per the Forex Association of Pakistan (FAP), the open market rates for buying and selling the Dollar were Rs279.5 and Rs281.5, respectively.
The exchange rates for the Emirates Dirham and the Saudi Riyal each decreased by 04 paisa, closing at Rs76.26 and Rs74.68, respectively.
Currency analysts believe that this currency appreciation will decrease the 1 tola gold price in Pakistan.
3. Pakistani Economic Recovery
Pakistan is facing a considerable decrease in the current account deficit (CAD) for the current financial year. The state bank reported that the July-December current account deficit was $831 million that is a significant reduction from $3.63 billion in the corresponding months of 2022-23. This remarkable drop of over $2.8 billion reflects a 77% decrease and is attributed to the growth in exports and remittances. Islamabad implemented various measures to address the challenge following the depreciation of the rupee since April 2022, when the PML-N coalition successfully ousted the PTI government through a no-confidence motion.
According to analysts, it is the best moment for gold investors to capitalize on the current conditions and invest in gold. This is because it’s a period when the demand for safe-haven assets is rising, leading to an increase in the value of precious metals and potentially impacting the price of 1 tola gold in Pakistan positively.
4. High Inflation Will Increase Gold Value
The Inflation in Pakistan is quite high in spite of implementing strong monetary policies. However, experts don’t think it will fall below 18.5 % by June 2024. Foreign exchange reserves have shown a slight increase and reached $8.2 billion in December 2023.Then ,it started rising and reached $4.5 billion June level. On the other hand rupee/dollar exchange rate has remained comparatively steady. The current account deficit is estimated to rise to approx. 1.5 % of GDP in the current financial year. Experts believe that inflation will remain high but the continuation of sound macroeconomic policies and the implementation of structural reforms could control inflation in next one year.
Experts believe that 1 tola gold price in Pakistan could increase in next few weeks due to high inflation in the country.
Investing inherently involves risks, regardless of the chosen asset. However, savvy investors generally recognize the significance of spotting opportunities during market downturns. The existing decrease in gold prices offers a good future for investors to diversify their portfolios, and protect against financial complexities, and potentially exploit on a future price recovery. Nonetheless, it remains vital to carry out comprehensive study and assess your requirements, objectives, and risk tolerance meticulously before making any speculation decisions, containing the incorporation of gold into your portfolio.
Therefore, it is extremely important to take advice from a registered brokerage house in Pakistan .The expert hired by these companies will offer you thoughtful and well-informed suggestions for your long-term investment strategy
Considering the rising price and value of 1 tola of gold in Pakistan from 129,000 to well above 200,000 Pakistani Rupees, opting for investments in precious metals appears to be a viable option.