More people are investing in equity markets
The price of gold has dropped by Rs1,500 in Pakistan in February so far. A tola now costs Rs111,800, according to rates shared by the All-Sindh Sarafa Jewelers Association on Saturday.
Gold prices in Pakistan respond to its international rate. Its price has been dropping internationally since the news of the successful development of the coronavirus vaccines and the start of the vaccinations globally.
According to a gold expert, people are now directing their investment to the equity markets, which are stock markets such as the Pakistan Stock Exchange (PSX).
The international price of gold was $1,815 by Saturday evening.
“The price of gold has been declining but it’s not as if the precious metal value will deflate considerably,” said Adnan Agar, a commodities expert. “The US think tanks are considering the stimulus package of $1.9 trillion. If that happens, it will weaken the dollar and gold [and other metals] are inversely proportional to the value of the greenback.”
“During February on a short-term basis, gold may not lose significant value,” he added.
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 per ounce by August 6.
“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 the 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 subsequently in stocks.
As the economy starts improving, investors move to capital market from gold and other metals. The situation in America plays an important role in influencing gold prices globally.