Prices follow international trends
The price per tola of gold has increased by Rs1,300 in two days according to rates compiled by the All Sindh Sarrafa Jewelers Association. A tola of gold will now cost Rs113,600.
The current international price for an ounce of gold is US$1,796. It dropped by US$10 on Wednesday. The international price of the yellow metal and its price in Pakistan follows the same trajectory but the price change in the international market is reflected in Pakistan by a lag of a day.
It means, that if the gold price increases in the international market, Pakistan would report a price hike the next day. The same will be the case when the international price of gold reduces.
An ounce is a metric used to quantify gold in the international market, while the tola is used in Pakistan. A tola is approximately one-third of an ounce.
The price of gold and other precious metals go up during instability caused by events such as wars and disasters as they are considered safe havens for investment. Their prices fall when stable periods is expected ahead. Investors turn to gold when the economy and the stock markets do not seem lucrative.
On the other hand, when the economy starts improving, investors tend to switch to the capital market from gold and other metals. The situation in the US, one of the biggest economies in the world, plays an important role in influencing gold prices globally.
According to commodity expert Adnan Agar, the dollar against other currencies has weakened to a level where buying may start again, which means the dollar will strengthen.
“Dollar and gold prices are inversely correlated. When the dollar weakens, gold prices go up. When the dollar strengthens, gold price goes down,” Agar explained.
The price of gold started going up internationally as countries went into lockdown in March 2020. It rose from US$1,471 to reach an all-time high of US$2,063 an ounce by August 6, 2020. The per tola price in Pakistan rose to Rs132,000 at the time.