Karachi, July 20, 2023 – In a twist of events, gold prices in Pakistan experienced an unexpected and significant decline on Thursday, July 20, 2023, despite the devaluation of the local currency against the US Dollar.
This surprising drop in gold rates has left financial experts and analysts perplexed, as it defies conventional wisdom that a weaker domestic currency should lead to higher gold prices in the country. The situation has sparked inquiries into the underlying factors influencing the Pakistani gold market and its connection to both the exchange rate and international gold prices.
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On July 20, 2023, the price of 24-karat gold per tola in the local market plummeted by a staggering Rs 5,300, reaching Rs 221,100. Similarly, the price of 24-karat gold per 10 grams saw a substantial decline of Rs 4,544, closing at Rs 189,558.
The gold market in Pakistan typically operates in a closely interconnected manner with both the exchange rate and global gold prices. Ordinarily, when the Pakistani Rupee (PKR) weakens against the US Dollar, gold prices in the country tend to surge, as more local currency is required to purchase the precious metal, which is priced in USD in the global market.
READ MORE: Gold Rate in Pakistan Surges Sharply to Reach Rs 221,000 per Tola
Contrary to this established trend, on the same day, the PKR depreciated by PKR 1.85 against the dollar, settling at PKR 285.15 in the interbank foreign exchange market. According to conventional expectations, this currency devaluation should have resulted in an increase in gold prices in Pakistan. However, the market experienced an unexpected and sharp drop in gold rates instead.
Meanwhile, the international gold market remained stable, with gold maintaining its price at $1,978 an ounce. This stability adds to the mystery surrounding the divergent trend observed within Pakistan’s gold market.
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Financial analysts and experts are now closely monitoring the situation to identify the factors that might have caused this unanticipated drop in gold prices. Speculations suggest that other local economic factors or policies might be at play, possibly counteracting the effects of the currency devaluation.
The current situation could have mixed implications for investors and consumers in Pakistan. On one hand, it presents an opportune time for local buyers to invest in gold at lower rates. On the other hand, those who had previously invested in gold at higher prices may face potential financial losses.
READ MORE: Gold Price in Pakistan Eases Amid Decline in International Market
As the situation unfolds, market participants and policymakers will closely monitor the gold market’s developments to make sense of the unexpected drop in prices and to predict future trends. It remains to be seen whether this event is a one-time anomaly or marks the beginning of a new trend in the Pakistani gold market.
Overall, the unanticipated drop in gold prices in Pakistan has left experts scratching their heads, prompting further investigations and cautious monitoring of the gold market’s dynamics to understand its implications for the economy and investors in the country.
