Gold prices in Pakistan dropped on Wednesday, mirroring a significant decline in the international bullion market, where prices fell over 2%, hitting a more than one-month low, as rising optimism over global trade boosted investor appetite for riskier assets.
According to data released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold per tola in the local market slipped by Rs2,300 and settled at Rs341,900. Similarly, the rate for 10 grams of gold declined by Rs1,972 to Rs293,124.
The decline comes a day after gold saw a sharp rise, with the per-tola rate surging by Rs3,700 on Tuesday to reach Rs344,200.
Internationally, gold prices dropped more than 2% on Wednesday, hitting an over one-month low, as rising trade optimism boosted risk appetite, leading investors to shift away from bullion, according to Reuters. Spot gold slipped to its lowest since April 11, shedding 2.1% to $3,180.29 an ounce as of 1145 EST (1545 GMT). Bullion fell as low as $3,174.62 earlier in the session. US gold futures eased nearly 2% to $3,184.20.
"The global relief rally sparked by the steep reduction in US-China tariffs has triggered a correction through technical levels in gold," said Tai Wong, an independent metals trader.
Commenting on the trend, Adnan Agar, Director at Interactive Commodities, said that gold prices turned downwards, with the metal marking a low of $3,175 and a high of $3,254 during the trading session. He noted that the key support level lay between $3,150 and $3,160. A break below this could potentially send prices down to $3,100 and possibly as low as $3,000.
However, Agar also hinted at a possible short-term rebound from the $3,140-3,160 range, citing technical support. "Despite potential short-term gains, the broader outlook for gold is turning bearish," he said. Improvement in the US economy, easing inflation, resolution of Chinese tariff concerns and reduced geopolitical tensions are dampening gold's appeal.
Agar suggested that while gold had already seen a correction of nearly $300 globally, a larger correction in the range of $800 to $1,000 may still be on the horizon, contingent on monthly and multi-month closing patterns turning negative.
"Gold's bullish momentum will likely be challenged if the metal posts a weak monthly close. A sustained downtrend over two to three months could mark the beginning of a deeper correction," he added.
Meanwhile, the Pakistani rupee further declined against the US dollar on Wednesday, slipping by 0.02% in the inter-bank market. By the end of trading session, the local currency closed at 281.72, marking a modest depreciation of five paisa from Tuesday's close at 281.67.
On the global front, the US dollar steadied on Wednesday after posting its sharpest drop in over three weeks a day earlier. The decline was triggered by weaker-than-expected US consumer inflation data, which strengthened expectations for potential Federal Reserve rate cuts. Meanwhile, easing global trade tensions also contributed to the dollar's relative stability.
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