Prices of gold witnessed a surge in Pakistan on Wednesday as it followed the trend of the international bullion market. The rate of gold per tola witnessed a hike of Rs4,600 on Wednesday, thereby taking its price up to Rs433,836, as per the rates announced by APGJSA.

Movement in Local Market

This is because the fact that gold per tola rises by Rs4,600 in just one day depicts how powerful the current bull run is in gold. In addition to this rise, even the 10-gram gold went up in price selling at Rs371,944 after rising by Rs3,944.

It is worth noting that the above rise comes after gains made on the preceding day when gold price per tola went up by Rs4,700 on Tuesday to reach Rs429,236. In other words, the gold per tola goes up by Rs4,600 on top of its already high prices.

Reasons for Local Rise of Gold Per Tola

The main reason behind the rise of gold per tola by Rs4,600 is that it happened due to some movement in the international market. The global price of gold increased by $46 for the day and the price stands at $4,114 per ounce with the dealer adding an additional amount of $20.

Since the rate of gold in Pakistan is determined on the basis of international prices, converted into PKR with the help of the USD/PKR exchange rate, any kind of move in the international market will directly affect the local market price.

Prices for Silver Also Rise Slightly

There was a slight rise in the prices of silver too, but it was not as significant as that of gold. Silver prices saw an increase of Rs7 to hit Rs6,403 per tola, as stated in the very rate sheet issued by APGJSA. Though the rise in the silver prices was much smaller in percentages, yet it was a similar trend.

Factors Behind Rising Gold Demand Globally

The price level of gold in the international market has been consistently high over the past few months due to various reasons, including uncertainty in geopolitics, gold buying by central banks, and the safety factor sought by investors in view of the continued volatility in the global economy and politics. The tension prevailing in the Middle East and other currency and inflation issues have further added to the attraction of gold in the eyes of both institutional and individual investors.

In case of Pakistani gold buyers, the result is that its function as an investment and inflation hedge becomes increasingly important.

Implications for the Local Consumer and Investor Community

Since gold increased by Rs4,600 per tola within one trading day, consumers interested in buying jewellery are more likely to have a greater initial expense involved, especially in the run-up to the wedding season. Gold investors can enjoy the rising trend in prices because gold is considered an insurance against currency devaluation in Pakistan, as well as inflation.

In view of how much the local market follows the international prices, market observers expect to keep an eye on the international gold prices in the coming days in order to determine whether the trend is going to be sustained or not.