Gold plunges following US-China truce

Prices down Rs10,400 to Rs340,500 per tola; rupee edges up

KARACHI:

Gold prices in Pakistan maintained a downward trajectory with a massive fall on Monday, mirroring a sharp drop in the international market as risk sentiment crept in following the announcement of a temporary deal between the United States and China to reduce tariffs.

In the local bullion market, the price of gold per tola dropped by Rs10,400 to settle at Rs340,500, according to the All Pakistan Sarafa Gems and Jewellers Association (APSGJA). The 10-gram gold rate also declined by Rs8,917, closing at Rs291,923. The downtrend followed a similar fall on Friday when the price per tola had dipped by Rs1,800, ending the week at Rs350,900. Before this, the yellow metal nosedived Rs1,170/tola on April 23, 2025.

Globally, the safe-haven asset fell more than 2% on Monday as risk sentiment crept in following the announcement of a temporary deal between the United States and China to reduce tariffs, according to Reuters. Spot gold was down 2.6% at $3,237.04 an ounce. Bullion, considered a hedge against economic and geopolitical turmoil, hit a record high of $3,500.05 last month amid increased tariff uncertainty. US gold futures shed 3.1% to $3,241.70.

Adnan Agar, Director at Interactive Commodities, attributed the decline to improved trade sentiment between the US and China. "Gold opened lower today, marking a low of $3,207 before stabilising around $3,236. This drop is largely due to progress in US-China negotiations, where both sides agreed to suspend 90% of tariffs for a 90-day period," he said.

Agar added that gold faced key support levels at $3,200 and $3,180. "If prices fall below $3,180, we could see further downside. For now, the market remains weak and volatile as investors await further cues from ongoing talks," he noted.

Meanwhile, the Pakistani rupee posted a marginal gain against the US dollar on Monday, appreciating by 0.05% in the inter-bank market. According to the State Bank of Pakistan (SBP), the rupee closed at 281.57 against the greenback, strengthening by Rs0.14 compared to the previous session. Last week, however, the local currency had weakened by Rs0.65 or 0.23% to close at Rs281.71, down from Rs281.06 a week earlier.

Moreover, as of March 2025, Pakistan's central government debt rose to Rs73.7 trillion, marking a 0.9% increase month-on-month (Rs652 billion) and a 12.7% rise year-on-year. The domestic portion of the debt stood at Rs51.5 trillion, up 18.6% YoY, driven largely by long-term borrowings, particularly federal government bonds which surged 28.8% YoY to Rs39.7 trillion, according to AHL. Permanent debt rose to Rs40.6 trillion, while short-term debt declined by 2.3% to Rs7.8 trillion. Unfunded debt also saw a slight decrease and investments in Naya Pakistan Certificates dropped sharply by 33.2% YoY. Meanwhile, external debt increased marginally to Rs22.2 trillion, up 1% YoY.