Gold prices in Pakistan always tend to increase as soon as the wedding season approaches. So the month of April 2016 saw a healthy increase in the gold prices. Gold prices in Pakistan appreciated by 3.21 % in the month of April alone. This rise in demand and prices also can be attributed to the fluctuations in demand and supply of gold in the international market.
Gold prices fluctuations in international market
The gold prices in USA and in the international market are subjected to rapid increase and downfall as a result of increase/decrease in the US dollar, deflation, and recession in the world economy. Gold is a precious metal which is highly under the influence of the American dollar. Gold prices in international market started the month at $ 1212 and ended the month at $ 1282.
Gold prices in Pakistan in April
The gold prices in the country started the month at 50,709 PKR per Tola and ended the month at 52,341 per tola. The gold prices in Pakistan saw an uplift of about 3.21% in the April 2016. The quarterly growth of the gold prices was approx 16%.
Rise of the Gold prices in Pakistan and its causes
Following are the two most important factors affecting the Gold prices in Pakistan.
The value of Dollar
Gold prices in USA and in the international market are mostly affected by the rise and fall in the value of the US dollar. US dollar index is the most effective tool to measure the US dollar value. The dollar is measured by fluctuations in the relative geometric mean of this index. This index has values ranging from 1-100. If we analyze the US dollar index, we see that its opening value was 94.63 and the closing value was 93.00.This clearly shows that the value of dollar fell considerably in the month of April 2016.
Pakistani gold market is linked with the international market so fluctuations in Gold prices in USA also affect the Gold prices in Pakistan. In April, an interview was conducted with the president of Sindh Jewelers Association. He credited the gold price fluctuations in Pakistan to the fluctuations in the international market as well.
Gold prices increase in reaction to the Chinese economy
China has the second strongest economy in the world and any changes in this economy affect the global economy. The quarterly growth of the Chinese economy was 6.7 %, which is slowest quarterly growth rate in last seven years. This slow growth forced international investors to invest in gold as it is a safe haven investment option for them. This increased the demand of gold in the international market and caused gold prices in USA and Pakistan to rise once again in the month of April.
Advising the Pakistani gold investors about investing gold
Gold investments can be both long-term and short-term. Short term investors should adopt buy and hold strategy as gold prices are expected to rise in the month of May 2016.Long term investors should avoid investing in the gold as Gold prices in Pakistan are expected to fall in the current year.by