GOLD PRICE, ALL-TIME HIGH! WHAT SHOULD INVESTORS DO?

of the yellow metal.

Performance Of Gold During Periods Of High Inflation

Safe Haven Asset: Demand for gold rises during geopolitical uncertainties, pandemics, and crises as physical gold which is a high-value asset, can be easily transported, and also liquidity is such that it can be easily converted into cash in any part of the world.

Demand and Supply Factor: Continuous supply of gold is difficult as extracting gold from mines is a multiyear exercise involving a lot of effort, but demand for gold can shift in no time depending upon the economic conditions and thus fluctuate.

IN-DEPTH PAKISTAN’S DOUBLE JEOPARDY: BLAST IN MOSQUE AND IMF’S NO FOR NOW

NO,

Pakistan, which is battling economic woes, the recent events have come as double jeopardy. First a suicide bomb attacker killed 100 people in an attack on a mosque.

Gold prices touched all-time highs at Rs 59,500 per 10gm. Since the beginning of 2022, gold prices have gone up by ~20%. Gold was the best-performing asset class last year beating other asset classes like equities and debt by a huge margin.

REASONS WHY GOLD PRICES SOARED

US dollar rates hit a 9-month low, causing the price of gold to rally in the domestic and international markets.

Budget 2023 increased import duty on silver from 7.5% to 10% bringing it to par with gold. The 5% agriculture and infrastructure cess make the total duty payable at 15%.

Overall imported jewelry in all precious metals and article made of gold and silver now attract an import duty of 25% as against 20% previously.

Capital gains tax has been exempt from the conversion of physical gold into Electronic Gold Receipts (EGR), boosting the financialization of gold.

WHAT HAS ONE MISSED BECAUSE OF THE ABSENCE OF GOLD IN THE PORTFOLIO?

Gold as an asset class is considered to be a haven. This is because of its inverse relationship with that of other asset classes such as equity. When equity markets are under stress, gold prices tend to