A tola is currently selling for Rs104,000
The gold price dropped by another Rs2,000 in Pakistan over the last three days, according to rates shared by the All Sindh Saraf Jewelers Association. A tola of gold now costs Rs104,000.
The price of gold has been falling across the world. The precious metal has been losing its value since the emergence of several vaccines against the novel coronavirus. The vaccination process has begun in many countries, including the US.
But commodities expert Adnan Agar says that gold is not losing its value only to the improving Covid-19 situation. Cryptocurrencies, especially bitcoin, have been attracting investment too, which has negatively impacted the gold price.
Prices of gold and other precious metals increase during uncertain times such as wars and disasters as these are considered safe havens 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. The same happened during the Covid-19 pandemic.
Agar said the price of bitcoin has increased in the recent past, bringing it in competition with gold and other precious metals.
The expert doesn’t expect the gold price to fall below $1,650 an ounce in the international market before bouncing back a bit. Gold prices in Pakistan respond to the yellow metal’s international prices.
The gold price stood at $1,736 an ounce in the international market by the time this story was filed.
As the economy starts improving, investors move to capital market from gold and other metals. The situation in the US, the biggest economy of the world, plays an important role in influencing gold prices globally.
The gold price 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. The per tola price in Pakistan peaked to Rs132,000 at the time.
Agar said the gold price will fall to a new low before bouncing back and then again falling a bit lower than the previous low in the coming days.
“But gold price will not fall considerably. US alone has given around $9 trillion stimulus package so there’s enough money in the market that gold price will remain partially supported while capital markets also move up,” he said.