The core intention of study is to discover the association among gold prices, interest rate, inflation rate, exchange rate and their effect on trading volume of Karachi Stock Exchange (KSE) 100 index. Regression has been used for analysis of sample of monthly data from 2006 to 2011. Various sensitivity tests such as breuseh-Godfrey (LM test) for serial correlation, white heteroskedasticity test, Ramsey RESET test, cumulative sum of recursive residuals of square (CUSUMSQ) and cumulative sum of recursive residuals (CUSUM) have been used for checking the assumption of regression. Lagged Karachi Stock Exchange (KSE) 100 index’s trading and gold prices have been found positively and significantly effecting Karachi Stock Exchange (KSE) 100 Index trading volume. The variable of interest rate included in study has been found as showing insignificant results. Both inflation rate and exchange rate show negative but significant results. Finally, it is concluded that macroeconomic factors affect the KSE-100 index, so it is suggested that the adoption/ implementation of suitable economic policies would be advantageous for stock market and this in-turn will results in desired progress in the capital market.