Gold falls Rs2,100 ahead of Fed rate decision

Gold prices dropped on Tuesday, reflecting a decline in international rates. In the local market, the price of gold per tola fell Rs2,100 to Rs274,900, according to data provided by the All Pakistan Gems and Jewellers Sarafa Association (APGJSA).

Similarly, the price of 10-gram gold decreased Rs1,800 to Rs235,682. Internationally, bullion prices dropped $21 to $2,637 per ounce (inclusive of a $20 premium), as reported by the APGJSA.

Interactive Commodities Director Adnan Agar noted that the market remained focused on the upcoming US monetary policy decision scheduled for Wednesday. "The decision is crucial for the global financial system and will likely influence the gold market," he explained.

For now, gold prices are fluctuating within a range of $20 to $40 around the $2,640 mark. Agar added that trading activity tends to slow down during mid-December, with the market expected to pick up momentum after year-end holidays.

Internationally, gold was under pressure owing to a strengthening US dollar and climbing Treasury yields as investors focused on the Federal Reserve's final policy meeting of the year amid growing expectations of a gradual pace of rate cuts in 2025.

Meanwhile, the Pakistani rupee experienced a slight decline of 0.04% against the US dollar in the inter-bank market. By the close of trading, the local currency settled at 278.27, losing 10 paisa compared to the previous day's value of 278.17, reported the State Bank of Pakistan.

On the global front, the US dollar remained strong, hovering near recent highs ahead of the Fed rate decision.

Pakistan's Real Effective Exchange Rate (REER) rose to 102.92 in November, its highest level since April, compared to 100.78 in October. According to AHL data, this reflects a 2.12% month-on-month increase and a cumulative 4.14% rise so far in this calendar year.

Commenting on REER, Exchange Companies Association of Pakistan Chairman Zafar Paracha noted that it was unlikely to have a significant impact on the currency market.

"The situation is currently being managed through administrative measures and the dollar is expected to remain within a controlled range," he added.