Gold prices surge again, hit record high

KARACHI: Gold prices in both international and local markets rose to an all-time high on Monday.

In the international bullion market, the price of gold per ounce jumped by $62 to reach a new record level of $4,400.

Following the global increase, the price of gold in Pakistan’s domestic market also saw a sharp rise.

According to the All Pakistan Gems and Jewelers Association, the per tola price surged by Rs6,200 to a new historic high of Rs462,362.

Similarly, the price of 10 grams of gold increased by Rs5,315 to reach Rs396,400.

The latest surge comes two days after gold prices had dropped in the local market.

The price of gold per tola had dropped by Rs900, bringing it down to Rs454,862 on December 19. Similarly, the price of 10 grams of gold had decreased by Rs772 to reach Rs 389,970.

Market analysts say the local gold market is likely to remain volatile in the coming days, with prices closely tracking international trends and investor reactions, leaving buyers and traders watching closely for further movements.

What drives gold prices in global markets

Gold is widely recognised across the world both as a key investment asset and as a precious metal used in jewellery. As a globally traded commodity, gold prices are influenced by a range of economic and political factors.

Key drivers of gold prices include interest rates, monetary policy, geopolitical developments, investor risk appetite, currency movements, inflation or deflation trends, and demand from investors and the jewellery sector. Equity market performance also plays a role in shaping gold prices.

Gold is typically priced in US dollars, making movements in the dollar a major factor in daily price changes. When the dollar strengthens, gold tends to become more expensive for investors using other currencies, which can put downward pressure on prices. Conversely, a weaker dollar makes gold cheaper for foreign buyers and can push prices higher. Changes in the US Dollar Index often act as a key catalyst for fluctuations in gold prices.

Jewellery demand is another important factor, particularly in countries such as India, which is one of the world’s largest gold jewellery markets. Strong demand for jewellery can support higher gold prices, while weaker demand may contribute to price declines.

Interest rates also play a critical role in determining gold prices. Higher interest rates increase the opportunity cost of holding gold, as the metal does not generate interest or dividends, making it less attractive to investors. In contrast, lower interest rates reduce this opportunity cost, often boosting gold’s appeal as an investment and supporting higher prices.

Overall, gold prices reflect a complex interplay of global financial conditions, investor sentiment and real-world demand.