Gold's downward spiral: A tale of weak demand and rising prices.
Gold's recent fall has left many scratching their heads. In a surprising turn of events, gold prices have taken a dive, despite ongoing global tensions and economic uncertainties. But here's the catch: demand remains low, even during the peak wedding season.
On Wednesday, gold prices in Pakistan witnessed a sharp decline, mirroring the international trend. The 10-gram and one-tola prices dropped significantly, with the latter settling at Rs437,362. This decline can be attributed to a global fall in gold prices, with a notable $85 drop per ounce on Wednesday alone.
And this is the part most people miss: Despite the price drop, demand has not picked up. Mohammad Arshad, Chairman of the All Pakistan Jewellery Manufacturers Association, highlights that customers are still hesitant to return, even with gold prices crossing the Rs400,000 mark per tola. He emphasizes that many still cannot afford gold, with a single tola jewellery set costing a whopping Rs450,000.
The international market also saw a near two-week low in gold prices on Wednesday, following a massive single-day drop in the previous session. Investors are cashing in on profits ahead of key US inflation data this week. Gold prices have been on a rollercoaster ride this year, with multiple record highs and a 54% gain, driven by geopolitical tensions and economic uncertainty.
But here's where it gets controversial: With persistently high bullion prices and weak demand, manufacturing units are struggling. Arshad reveals that around 60% of these units are barely surviving, while others have had to reduce their workforce due to fewer orders. Investors, who had earlier jumped on the gold bandwagon, are now adopting a cautious approach, waiting for the right moment to re-enter the market.
So, what's next for gold? Arshad refrains from predicting, stating that global factors, including political developments, will play a crucial role. With the US Consumer Price Index report due this week, the future of gold prices remains uncertain.
Stay tuned for more insights and join the discussion: Is gold's downward spiral here to stay, or will it bounce back? Share your thoughts in the comments!
