Gold prices in 2024 hit historic highs, with international rates reaching $2,790 per ounce and local prices in Pakistan surging to Rs287,900 per tola. The rise in prices was driven by central bank purchases, especially from emerging markets, as well as escalating geopolitical tensions around the world.
Key drivers behind the price surge included intensified conflicts in the Middle East, the ongoing Russia-Ukraine war, and concerns about the sustainability of US debt. These factors made gold an attractive safe-haven asset, pushing prices higher. In addition to geopolitical instability, fears over US fiscal risks, particularly related to the national debt, also contributed to the growing demand for gold.
Central Banks Boost Gold Reserves
Central banks around the world, especially in emerging markets such as China, India, and Turkey, significantly increased their gold reserves in 2024. This demand from central banks added upward pressure on gold prices, with many countries buying gold to hedge against potential geopolitical shocks and fiscal instability.
Record Prices and Market Fluctuations
The highest price of 24-karat gold was recorded on October 30, 2024, with international rates reaching $2,784 per ounce, while local prices in Pakistan hit Rs287,900 per tola. In contrast, the lowest price occurred on February 14, 2024, when international prices were at $2,010 per ounce and local prices were Rs210,800 per tola.
Despite the volatile nature of the gold market in 2024, prices saw significant growth, reflecting both the geopolitical landscape and market conditions. Abdullah Abdul Razzaq, a member of the All Pakistan Saraf Gems and Jewellers Association (APSGJA), highlighted that the market was heavily influenced by events like the Russia-Ukraine conflict and Israel’s disputes with neighboring countries.
Steady Climb and Subsequent Correction
From March to late August 2024, gold prices consistently climbed, peaking above $2,800 in September. This rally was characterized by higher highs and higher lows, signaling strong market confidence. However, after reaching their peak, prices experienced a correction and declined sharply, stabilizing around $2,620 per ounce by December.
Gold Outperforms Other Investments in Pakistan
Gold emerged as a strong investment option in Pakistan in 2024, delivering a 24% profit. At the beginning of the year, the price of gold was Rs189,386 per 10 grams, and by December, it had risen to Rs234,311 per 10 grams. This outperformance was significant, particularly compared to other traditional investments like property and the US dollar.
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In contrast, the KSE-100 index of the Pakistan Stock Exchange saw an 84% increase in 2024, outperforming gold as the best-performing asset class. However, the US dollar saw a negative return of 1%, which further supported gold’s strong performance.
Fixed-Income Investments Show Strong Returns
In addition to gold, fixed-income investments also gained traction in 2024 due to high interest rates. The average bank savings rate remained at 18%, and National Savings’ three-year Special Savings Certificates (SSC) delivered a 17% return. Government-issued bonds like PIBs and T-bills also offered attractive returns, further diversifying investment options for individuals.
Looking Ahead to 2025
Analysts predict that gold will continue to perform well in 2025, with Goldman Sachs forecasting prices to reach $3,000 per ounce. The combination of geopolitical tensions, central bank reserve diversification, and macroeconomic factors will likely keep gold in demand, securing its status as a safe-haven asset.
Overall, 2024 was a pivotal year for gold, solidifying its place as a key investment in uncertain times.
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