Gold drops as traders eye US inflation data

Gold prices in Pakistan fell on Tuesday, mirroring losses in the international market, where the yellow metal edged lower as traders assessed tariff developments and awaited key economic data. A major US inflation report kept expectations for interest rate cuts intact, limiting the downside.

According to the All Pakistan Sarafa Gems and Jewellers Association, the price of gold per tola settled at Rs358,300 after declining by Rs500. The rate for 10 grams stood at Rs307,184, down Rs429. On Monday, gold had dropped sharply by Rs3,600 per tola, closing at Rs358,800.

Interactive Commodities Director Adnan Agar said the market remained under pressure due to a mix of geopolitical and economic factors. "Gold is exhibiting a downward trend as traders digest data that appears largely neutral for the precious metal," he noted.

Agar pointed to speculation ahead of a planned summit between the United States and Russia in Alaska on August 15 to discuss the war in Ukraine. "If the meeting leads to a peaceful resolution, it will typically reduce safe-haven demand for gold," he explained.

Over the past three to four months, gold has traded within a narrow range. Analysts now expect this range to be tested, with two developments likely to be decisive: the outcome of US-Russia talks and the direction of US monetary policy.

While the Federal Reserve has kept interest rates unchanged, markets are watching for a possible cut, with the next policy meeting due in September. "Both the summit and upcoming Fed decisions will be critical for shaping gold's next move," Agar added.

Spot gold was down 0.3% at $3,333.68 an ounce at 10:31 am EDT (1431 GMT), according to Reuters. The US Consumer Price Index (CPI) rose 0.2% last month after gaining 0.3% in June. For the 12 months through July, the CPI advanced 2.7%. Economists polled by Reuters had forecast a rise of 0.2% in July and an increase of 2.8% year-on-year.

Meanwhile, the Pakistani rupee extended its mild gains against the US dollar, appreciating by 0.01% in the inter-bank market. The local currency ended the day at 282.42, up three paisa from Monday's close at 282.45.

Globally, the US dollar traded flat ahead of a closely watched consumer inflation report later in the day, which could influence expectations for potential interest rate cuts by the Federal Reserve.

The Australian dollar also held steady in the hours leading up to the Reserve Bank of Australia's policy decision. Meanwhile, the US dollar index, which tracks the greenback's performance against six major currencies, including the euro and yen, was unchanged at 98.497, after gaining 0.5% over the previous two sessions.