The price of gold reached its all-time high in the country on Thursday as a tola was trading at Rs82,000, according to the All Sindh Saraf and Jewellers Association.
The precious metal is trading at its highest level in the country’s history, surpassing its previous high of Rs81,500. Gold prices have been on the rise for many months now. Since July, 2018, gold has become Rs22,000 more expensive, according to ASSJA. This was in line with international gold prices, which increased by $178 per ounce in the same period.
The prices compiled by the ASSJA come with a lag of a day after changes in international prices. Pakistani traders adjust gold prices based on price movements in the international market and fluctuation in the dollar rates as well as market forces of demand and supply.
The dollar has been increasing for the past many months, setting a new high every few weeks. Earlier in the day, the greenback reached Rs159.5 in the open market. The rise of the dollar explains much of the corresponding increase in gold prices as gold prices increased more than 30% in a year versus a 29% increase in dollar rates.
Besides exchange rates, an increase in international gold prices also causes prices in Pakistan to go up. When interest rates in the United States are low, investors move away from interest-based instruments such as treasury bills and bonds to gold-backed funds. With the Federal Reserve (the American central bank) expected to reduce its interest rates even further, investors have been parking their money in gold, causing a hike in the price of the previous metal.
When this report went online, gold futures were trading at $1,420 per ounce in the international market.