Which Factors Effect the Gold Rates in Pakistan

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

Economic Conditions Effect on Gold Rate

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

Interest Rates Effects

Interest rate is directly effective factor on the gold rates. Central Bank decides the interest rate through a monetary policy. 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 factor which drives the gold rates in Pakistan. When 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 loose the profit margin and interest.

Dollar Rate vs Pakistan Rupee

US Dollor is international currency. All trade of gold is done through the US Dollors 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 down its value then gold rate will be increased.

Inflation

When the inflation is high people suffer to fullfill their basic needs, in this situation the purchasing power of gold decreases and 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 evidences. For example a company took risk on the basis of news but instead of profit the loss their investments. This is the concept of Speculation. When Speculation is high the gold rate increases. Speculation also depends on the different factors like fast changing ongoing situation of the economy.

Jewlery Demand Effects

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

Central Bank SBP Buy and Sell

Centeral bank of Pakistan SBP selling and buying capacity also impact on gold rates. When reserves of SBP are high then gold rates are down, and when reserves get lower then gold rate increased with an inversely proportion.

Cutting Edge Technology 

With the advancement in the technology and latest equipments mining of the gold is becoming easy which impact on gold rate. With advance technology labour cost reduced and gold rates decreased due to profit margin.

Environment Factors

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

International Environment

Peace and war also impact on 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 the 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.