The year 2024 has been a remarkable chapter in the story of gold, characterized by significant price surges and volatility both in Pakistan and on the global stage. As the world navigated through geopolitical tensions and economic uncertainties, gold emerged as a beacon of stability for investors. This article delves into the key developments in the gold market throughout the year, examining the factors that influenced prices, the impact on trade, and the outlook for the future.
A Surge in Prices: Local and International Trends
In Pakistan, gold prices soared to unprecedented heights, closing the year at Rs272,600 per tola, a staggering increase of 23.9% from Rs220,000 per tola at the end of 2023. This surge mirrored international trends, where gold prices rose by $532 per ounce, marking a 25.5% increase from $2,082 at the close of the previous year. According to the All Sindh Saraf Jewellers Association, the peak price in the local market was recorded on October 30, when gold reached Rs287,900 per tola, coinciding with international prices hitting $2,784 per ounce.
Conversely, the lowest prices of the year were observed on February 14, with gold trading at Rs210,800 per tola and $2,010 per ounce. This volatility highlighted the unpredictable nature of the gold market, influenced by a myriad of global factors.
Factors Driving Price Increases
The dramatic rise in gold prices throughout 2024 can be attributed to several interrelated factors. Geopolitical tensions, particularly in the Middle East and Eastern Europe, played a crucial role in driving investors towards gold as a safe-haven asset. The ongoing conflict between Israel and Iran, coupled with the protracted war in Ukraine, created an atmosphere of uncertainty that propelled demand for gold.
Economic conditions also significantly influenced gold prices. Central banks in the US and Europe adopted lenient monetary policies, including interest rate cuts, which further fueled demand for gold. Inflationary pressures and a slowing economy in China added to the allure of gold as a secure investment. As investors sought refuge from economic instability, gold became a preferred asset, leading to its remarkable price increases.
The Impact on Trade Activity
Despite the soaring prices, the gold market in Pakistan experienced a notable decline in trade activity. Jewellers reported only 5-10% of normal trading levels, as the unaffordability of gold pushed many customers to sell their existing gold or make smaller purchases. This shift was primarily driven by economic uncertainty, with consumers opting for gold as a hedge against potential financial instability.
The local market also saw adjustments in gold prices, with a $20 premium over international rates, reflecting domestic demand dynamics and currency fluctuations. As prices stabilized towards the end of the year, analysts remained cautious, anticipating continued volatility in 2025 due to ongoing geopolitical and economic uncertainties.
A Broader Perspective: Gold’s Performance Among Other Metals
Gold’s performance in 2024 stood out against a backdrop of mixed results for other metals. While gold achieved a remarkable 27% advance, driven by US monetary easing and sustained geopolitical risks, base metals faced a more challenging environment. The LMEX Index of six metals on the London Metal Exchange showed modest gains, hampered by China’s prolonged economic slowdown.
Iron ore prices plummeted due to weak construction activity in China, which plunged the steel industry into crisis mode. Lithium, essential for battery production, also faced significant declines as a global supply glut compounded challenges in the electric vehicle sector.
Looking Ahead: The Future of Gold
As 2024 draws to a close, the gold market stands at a crossroads. Analysts predict that the combination of ongoing geopolitical conflicts and economic instability will continue to make gold a preferred asset for investors seeking security in turbulent times. The strong gains in gold prices this year, despite a stronger US dollar and rising real Treasury yields, suggest a potential shift in market dynamics.
David Scutt, an analyst at StoneX Group Inc, remarked on the remarkable and relentless nature of gold’s performance, indicating that the “gold game looks to have changed.” As investors turn their attention to 2025, uncertainty surrounding US monetary policy, potential frictions from the new presidential administration, and China’s efforts to revive growth will play pivotal roles in shaping the future of gold.
In conclusion, the year 2024 has been a testament to gold’s enduring appeal as a safe-haven asset amidst global turmoil. As the market navigates through uncertainties, gold’s position as a cornerstone of investment strategy remains steadfast, promising continued interest and volatility in the years to come.
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