Gold’s joyride speeds uphill, reaching Rs308,000 per Tola

The seemingly never-ending joyride of gold prices upward continues as gold prices recently summited a new peak of 308,000 rupees per tola – after experiencing a 3,800 rupee price spike. Moreover, reports reveal that the 10-gram rates have surged to 264,060 rupees.

Reports reveal that central banks across the world are making an active effort to build up their gold reserves, which has significantly contributed to the astronomical rise in gold prices that have been experienced recently.

Towards the end of 2024, central banks collectively purchased a staggering 333 tons of the precious metal, which marked a 54 percent year-on-year rise in central bank gold purchases. Notable purchases have been witnessed from the People’s Bank of China, the National Bank of Poland, and even The Reserve Bank of India.

The logic behind the rise in gold prices because of the aforementioned reasons is hidden in the market forces of supply and demand. Since large entities such as central banks are purchasing the commodity in bulk, it raises demand, whereas supply simply can’t keep up – as exploration and mining operations are time-consuming.

While central banks remain the largest driver of gold demand, smaller independent investors have also invested in the commodity. Speculative forces suggest that prices will surge past $3,000 per ounce.

According to the All Pakistan Sarafa Gems and Jewellers Association (APSGJA), international gold prices are facing inflationary pressures because of US President Donald Trump’s threats to impose an extortionate 25 percent tariff on certain trade goods and commodities. This has reportedly resulted in gold prices rising by $34 since Tuesday to reach $2,944 per ounce.

Rising tariffs reduce the demand for the goods and services of the country against which tariffs are being levied. As such, the value of its currency falls accordingly because of the fall in demand for its goods. People are purchasing gold in order to safeguard their cash holdings from depreciating in value because of tariffs.

For reference, on 1 January 2024, 10-gram gold and one-tola gold rates reportedly stood at a conservative 188,357 rupees and 219,700 rupees. However, geopolitical and economic factors have caused prices to surge by 75,703 rupees (10-gram) and 88,300 rupees (one tola).

While rising gold prices spell great news for those who jumped on the bandwagon, when it was still slow, they are detrimental to certain businesses. For instance, chairman Mohammad Arshad of the All Pakistan Jewellers Manufacturers Association has revealed a severe decline in jewellery purchases as prices continue to rise.

As per reports, small to medium gold jewellery makers have not been receiving orders and sit idle. If this situation persists, it could push a large number of business owners out of the jewellery-making industry.