Gold sheds Rs1,750 in Pakistan since January 1

The price of gold has dropped by Rs1,750 in Pakistan during the month of January. A tola now costs Rs112,550 in the country, according to rates shared by the All-Sindh Saraf Jewelers Association Monday.

Gold prices in Pakistan respond to its international prices. The precious metal’s price has been decreasing internationally after the news of successful development of coronavirus vaccines.

But the prices have been fluctuating during the ongoing month, rising as high as $1,960 an ounce on January 6 to dropping to as low as $1,809 by January 17. The international price of the yellow metal stood at $1,834 by the time of filing of this story.

“If Joe Biden’s inauguration takes place smoothly then gold value may melt further,” said Adnan Agar, an expert on commodities. “But there are chances that there are large protests against him throughout the US. It may help gold see its value rise.”       

The price of gold may show volatility on a short-term basis but it will gradually lose its value in the long run since Biden has vowed for an expanded access to vaccines in the US, according to Agar. Furthermore, 2021 has been tipped as the year of recovery after a dismal 2020 for economies around the globe due to the Covid-19 pandemic.  

“But the vaccine’s success so far is lukewarm as deaths have also been reported after vaccine administration,” he said. “So, it’s all a guess and things can be unpredictable.”

The price of gold started increasing internationally as countries across the world went into lockdowns in March 2020. It rose from $1,471 to reach an all-time high of $2,063 an ounce by August 6. But later a fall in the price of gold was also seen. It dropped to $1,809 on January 17.

“Whenever there’s a year of low economic growth, the next year is generally considered a year of recovery,” Agar said. “So, expectations are that economies will recover this year so price of gold may go down.”

The prices of gold and other precious metals increase because of uncertainty as they are considered safe for investment. Their prices fall when stable times are expected ahead. Investors turn to gold when things don’t look in favor of the economy and stocks.

As the economy starts improving, investors move to capital market from gold and other metals. The situation in America, the biggest economy of the world, plays an important role in influencing gold prices globally.