What determines the price of gold, and why does it keep fluctuating?

Today, on March 01, 2022, the 24K Gold price lands at 125900 PKR per tola,and 107,990 PKR per 10 grams (last updated 11 hours ago).


By Aleena Faysal

The gold rate in Pakistan moves following the international gold market dynamics and the value of USD in Pakistani currency. The gold price escalates whenever the Pakistani rupee depreciates relative to the dollar. Internationally, the key factors that appreciate or depreciate gold’s value are its demand-supply curves and investors’ market behavior. As the value of the Pakistan currency is much lower than the Dollar, Euro, and Pound Sterling, gold is many times more expensive in Pakistan than in international markets.

The ever increasing demand for gold and its positive price elasticity

Gold is aloof in its purity, elegance, and preciousness. It is the reason behind its extensive mining, circulation, and possession. In today’s world, gold has unparalleled investment scope. Many gold investment options are safe havens during an economic recession.

Economic studies have shown that gold has positive price elasticity, i.e., prices tend to go up with increasing demand.

In Pakistan, the usage of gold is higher than investment because of cultural ties, and people deem it a status symbol.

Who determines the gold price?

London Bullion Market determines and displays the daily international gold rates. The most significant gold hub in Pakistan is the Karachi Saraf Jewellers Association, which announces the final figures upon the closing of every market day. It is also the most reliable source of official statistics regarding the daily gold rate in Pakistan. However, Sarafa markets of all the country’s major cities decide their own specific pace.

International gold rates today

Internationally, gold is dollar-denominated to hedge it against inflation. In today’s London bullion market, 24K gold is priced at $12,173 Per tola and $12,173 Per 10 grams.

Which nations have the greatest reserve of gold commodities?

The most precious and famous gold commodities are found in the United States, China, South Africa, Australia, Peru, and Russia.

International dynamics that affect the gold rate in Pakistan’s market

Every gold dealer can be found blaming global politics for the daily upheaval in gold prices. The Middle East and Gulf countries are the biggest hubs of gold import to Pakistan; any disruption in the supply due to regional conflicts and trade sanctions causes a massive swing in the prices.

Some of the most prominent examples in the recent era are the US-China trade war and the Russia-Ukraine conflict. The gold price has dropped $10 per ounce in international markets following the Russian invasion of Ukraine. Dealers and investors must watch these global developments closely because they directly affect local markets.

How did Covid-19 affect the gold rate in Pakistan?

Gold Prices sky-rocketed during the coronavirus outbreak because of the uncertain and clouded global financial scenario.

Weak economic conditions caused a tremendous upsurge in investors’ demand and a subsequent bump in international prices. On August 05, 2020, gold rates were recorded as a historic high, reaching RS 128,700 per tola.

When we analyze the gold prices in Pakistan during the fiscal year of 2021, we note them higher than the corona year of 2020. This trend outlined that the gold market has not fully recovered from the aftershocks of the pandemic and economic woes.

Silver prices on March 01, 2022

Silver is being sold today at 4,042.77 per oz and 129.98 per gram.

Final Words

The gold rate in Pakistan can be pushed down only after taking the necessary measures regarding the USD to PKR rate and controlling countrywide inflation. Investors’ behavior will also be improved following these necessary fiscal amendments.




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