Gold prices in Pakistan have largely shrugged off international market trends due to weak demand conditions at home. While economic and political uncertainty is expected to keep consumer sentiment low, the gem and jewellery industry offers massive economic potential. International gold prices have slid 10% this year through Oct. 31, having plunged in September.
There’s another factor behind gold price weakness in the international market, a strengthening Dollar Index. A stronger dollar – which makes the metal more expensive in other currencies — helps keep the price of gold lower via reduced demand.
What’s Driving High Gold Prices in Pakistan?
The rupee has depreciated 25% since Jan. 4, 2022, when the rate was at 176.75 against the dollar. The price of per tola gold in Pakistan was hovering around Rs. 152,000 on Tuesday. Only a few people are interested in purchasing gold amid the ongoing inflation squeeze.
Pakistan held $3.48 billion of gold reserves as of Sept. 30, 2022, according to State Bank of Pakistan data. Gold prices are expected to remain high in Pakistan unless demand conditions improve or the rupee rebounds against the dollar. Idress: “Devaluation is bound to happen”.
Pakistan has more than 51 mines of precious stones across northern areas, including Swat, Kashmir, Gilgit-Baltistan and Balochistan, Idress said. If the government focuses on their mining and value addition, Pakistan could boost its exports and reduce its trade deficit.