Gold up Rs4,000 as dollar dips

Gold prices in Pakistan continued their upward trajectory on Monday, mirroring gains in the international market where the yellow metal rose due to a weaker US dollar and renewed safe-haven demand following the US credit rating downgrade.

In the domestic market, the price of gold per tola surged Rs4,000 to settle at Rs342,500, according to data released by the All Pakistan Sarafa Gems and Jewellers Association (APSGJA). Similarly, the price of 10-gram gold rose Rs3,429 to Rs293,638.

This rally follows Saturday's momentum when gold rose Rs2,400 to hit Rs338,500 per tola, reflecting sustained buying interest and global cues. Analysts note that with the rupee holding relatively stable, gold's local price movements are being closely dictated by international trends and investor sentiment in response to the economic uncertainties abroad.

Globally, gold prices drifted higher on Monday, steered by a softer dollar and safe-haven demand after Moody's downgraded the US government credit rating, according to Reuters. Spot gold rose 1% to $3,234.70 an ounce by 1050 EST (1450 GMT).

Moody's cut the US rating to "Aa1" from "AAA" on Friday, citing rising debt and interest cost "that are significantly higher than similarly rated sovereigns".

"Overall, over the next few months, I think gold is a good safe bet considering the downgrade on the United States. It's still to me a buy-and-hold market," said Bob Haberkorn, Senior Market Strategist at RJO Futures.

The US dollar index hit its lowest level since May 8 while Wall Street's main indexes slipped. A weaker US currency makes gold less expensive for other currency holders.

Financial markets were also rattled a bit when US Treasury Secretary Scott Bessent said on Sunday that President Trump would impose tariffs at the rate he threatened on April 2 if trading partners did not negotiate in "good faith."

"Gold prices remained range bound on Monday, with limited movement observed in the international market," said Adnan Agar, Director at Interactive Commodities. Speaking on the day's trend, Agar noted that the metal traded within a narrow $50 band, fluctuating between a high of $3,250 and a low of $3,206.

Meanwhile, the Pakistani rupee registered a slight decline against the US dollar, depreciating 0.04% in the inter-bank market. According to the State Bank of Pakistan (SBP), the local currency closed at 281.77, down Rs0.11 from the previous session.

This follows a modest gain recorded last week, when the rupee appreciated Rs0.05, or 0.02%, closing at 281.66 compared to 281.71 a week earlier.