Gold rate in Pakistan is principally linked to the international gold markets and is influenced primarily by the demand and supply at the international level. Pakistan is listed among top 10 buyers in the world with China leading the list followed by Russia, India and the USA. In the recent years there has been great surge in the demand of gold especially from China whose appetite for gold is clearly reflected by its economic growth.
On the other hand during the same period the weaken dollar and increasing global inflation led the US administration to take measures including to restrict annual stimulus for the economy to US $ 75 billion with the intention to retard the inflation process and support the dollar which was considered as a running support for the gold as an inflation hedge fund in the markets.
This led to decrease in gold prices up to 28 % in 2013 alone. The subtle decline in the prices was started in the last quarter of 2012 when the prices were all time high since the year 1980 where 24 K gold was being traded above US $ 1,800 per troy ounce.
Small investors in Pakistan also suffered huge losses in the last 1 and half years due to this downturn in the prices of precious metal while on the other hand a few traders who had clear view of the situation gained a lot from the scenario.
This phenomenon is also partly attributed to fraudulent market speculations by many gold bullion companies who seemingly dragged market buyers to take advantage of rising prices of gold during the inflation period of 2007-2010. Pakistani gold markets exactly reflected the same scenario with the prices lurking a few dollars above than the international markets.
Currently the 24 K gold in Pakistan is priced at US$ 1,332 per troy ounce which is expected to increase steadily in 2014-2015 owing to increasing demands from Chinese domestic and Russian’s investment markets.