Gold Prices Decline in Pakistan: Market Trends Explained
In recent weeks, gold prices in Pakistan have experienced a steady decline, with the cost of one tola (11.66 grams) falling by Rs1,700 on Monday, reaching Rs274,500. This decrease is part of a broader trend that mirrors the fluctuations in the international market. On the previous Friday, gold prices had also dropped by Rs1,100 to Rs276,200 per tola, according to the All Pakistan Sarafa Gems and Jewellers Association.
Globally, the price of gold fell by $17 to $2,633 per ounce, impacting local markets. The drop in gold prices is largely attributed to factors such as shifts in the US dollar’s value and upcoming market reports, including key US employment data set for release in November.
Factors Contributing to Gold Price Fluctuations
The global gold market has been relatively calm, but several factors are contributing to the recent declines. Adnan Agar, Director of Interactive Commodities, explained that the fluctuations in the gold market were expected, especially considering the absence of significant events influencing prices. According to Agar, the gold market’s movements have remained within normal ranges and are tied to external factors such as US economic data, which can influence investor behavior.
Agar also pointed out that as the holiday season approaches, market activity is likely to pick up in early January. The dollar’s performance has played a pivotal role in this trend, with the dollar index increasing by 0.5%, making gold more expensive for holders of other currencies. This, in turn, caused a dip in spot gold, which ended its four-session winning streak with a drop of 1% before settling 0.5% lower at $2,640.93 per ounce. Similarly, US gold futures fell by 0.6%, closing at $2,663.90.
Pakistani Rupee Experiences Gains Amid Political Instability
While gold prices have declined, the Pakistani rupee showed slight improvements. On Monday, the rupee appreciated by 0.03% in the interbank market, closing at 277.97 against the US dollar. This was a welcome rebound following the previous week’s minor loss of 0.10%, during which the rupee briefly dipped below 278 for the first time in over 10 weeks.
Malik Bostan, Chairman of the Forex Association of Pakistan, suggested that the rupee might continue to stabilize further, potentially hovering around 250 in the near future. The currency’s recovery followed political unrest on November 24, which had temporarily impacted market confidence. However, the rupee has since shown resilience, suggesting that investor sentiment has improved as the political situation stabilizes.
Economic Indicators Show Positive Trends for Pakistan
The improvement in the rupee’s value coincides with some positive economic indicators for Pakistan. In November 2024, the trade deficit narrowed by 19% year-on-year (YoY) to $1.6 billion. Exports rose by 9% YoY, amounting to $2.8 billion, although there was a slight 6% month-on-month (MoM) decline. Imports also showed a decrease of 3% YoY and 4% MoM, falling to $4.4 billion.
Over the first five months of fiscal year 2025 (FY25), the trade deficit shrank by 7% YoY to $8.7 billion. This trend indicates that Pakistan’s external sector is stabilizing, although challenges remain.
Inflation Declines Sharply: A Positive Economic Shift
One of the most significant developments in November 2024 was the sharp decline in inflation, which hit a 79-month low of 4.9% YoY, down from 29.23% in the same month of 2023. This represents the lowest inflation rate in Pakistan since April 2018, when inflation stood at 3.96%. The average inflation rate for the first five months of FY25 was 7.88%, a significant improvement compared to 28.62% during the same period last year.
The Consumer Price Index (CPI) for November 2024 dropped to 4.9% YoY from 7.2% in October, bringing the average CPI for FY25 to 7.9%, a marked improvement from 28.6% in FY24.
Gold Market Outlook for the Future
Looking ahead, experts anticipate that gold prices in Pakistan will continue to be influenced by global economic trends, particularly US employment data and the performance of the dollar. The market is expected to remain volatile, with potential fluctuations driven by geopolitical tensions and other economic factors.
Gold Price Predictions for Pakistan in 2024
Analysts predict that gold prices may experience further declines if the US dollar continues its upward trend and economic conditions in Pakistan remain stable. However, there is also the possibility of price rebounds depending on future global events and local economic developments.
FAQs about Gold Prices and the Pakistani Rupee
1. Why did gold prices fall in Pakistan? Gold prices in Pakistan fell due to fluctuations in the international market, influenced by changes in the value of the US dollar and the anticipation of upcoming economic data from the US.
2. How does the US dollar affect gold prices? When the US dollar strengthens, gold becomes more expensive for holders of other currencies, leading to a decline in gold prices in countries like Pakistan.
3. Is the Pakistani rupee strengthening? Yes, the Pakistani rupee appreciated slightly by 0.03% against the US dollar, indicating a recovery following recent political unrest.
4. How is Pakistan’s economy performing in November 2024? Pakistan’s economy showed positive trends in November 2024, with a decrease in the trade deficit, increased exports, and a significant decline in inflation.
5. What is the outlook for gold prices in Pakistan? Gold prices in Pakistan are expected to remain volatile, influenced by global economic trends, especially the performance of the US dollar and upcoming economic reports.
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