Which Factors Effect the Gold Rates in Pakistan

There are many factors that drive the gold price in Pakistan. Gold is used in Jewellery, investment purposes, medical and electronic equipment. There are multiple factors to control the gold rate throughout Pakistan. We will discuss those factors in detail.

Economic Conditions Effect on Gold Rate

Pakistan is suffering from uncertain economic conditions due to the loans, industry movement, ban on imports,s and less interest from foreign investors. When investors do not find their profit in the economy they pull back the money and gold rates increased.

Interest Rates Effects

Interest rate is a direct effective factor on the gold rates. Central Bank decides the interest rate through a monetary policy. The State Bank of Pakistan is the central bank to decide the interest rate. When interest rates are low the gold prices also become low and make good opportunity for investors.

Supply and Demand Effects

Supply and demand of scrap gold in the market is also a factor which drives the gold rates in Pakistan. When the supply of scrap is fulfilling the demand the rates will be less. Meanwhile when demand increase and supply does not meet the criteria then gold prices rise and investors lose the profit margin and interest.

Dollar Rate vs Pakistan Rupee

US dollars is an international currency. All trade of gold is done through the US dollars therefore the change in the dollar rate with respect to Pakistan Rupee impact highly on gold rates. When PKR is strong the gold rate will be less and when PKR is down its value then the gold rate will be increased.

Inflation

When inflation is high people suffer to fulfil their basic needs, in this situation the purchasing power of gold decreases and the rate of gold increases. A strong economy with low inflation makes people purchasing power high and gold prices low.

Speculation effects

Speculation means the theory without firm evidence. For example, a company took a risk on the basis of news but instead of profit, they lost their investments. This is the concept of Speculation. When Speculation is high the gold rate increases. Speculation also depends on different factors like the fast-changing ongoing situation of the economy.

Jewellery Demand Effects

Asian countries are popular for wearing gold jewellery. When the marriage season starts the demand for jewellery increases and the gold rate automatically increased in the direct proportion. In Pakistan, jewellery is an essential part of any marriage function so everyone demands jewellery and gold prices got increased.

Central Bank SBP Buy and Sell

Central Bank of Pakistan SBP selling and buying capacity also impact gold rates. When reserves of SBP are high then gold rates are down, and when reserves get lower the gold rate increased with an inverse proportion.

Cutting Edge Technology 

With the advancement in technology and the latest equipment mining gold is becoming easy which impact on gold rate. With advanced technology labour costs were reduced and gold rates decreased due to profit margin.

Environment Factors

A stable environment for work is necessary. Human rights of labour and the working environment at the mining of gold also affects gold prices throughout the world. 

International Environment

Peace and war also impact the gold rates. With the peaceful conditions trade, mining and other things are easy to handle. Therefore the gold rates stay stable or decrease in peaceful countries. In the war, the whole world feel the effects of war and gold prices get increased as it is difficult to handle the trade and currency.