Gold plunges Rs7,500/tola amid global selloff

Slides to two-week low as investors eye US inflation, Fed policy; rupee edges up

KARACHI:

Gold prices in Pakistan declined sharply on Wednesday, mirroring losses in the international market, where the precious metal fell to a near two-week low amid profit-taking ahead of key US inflation data later this week.

According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold dropped by Rs7,538 per tola to settle at Rs437,362, compared to Rs444,900 a day earlier. Similarly, the rate for 10 grams of gold fell by Rs6,463, closing at Rs374,967.

In the international market, spot gold extended Tuesday's steep slide, its biggest single-day fall in five years, as investors booked profits and awaited economic cues from upcoming US inflation figures and next week's monetary policy decision by the Federal Reserve.

Spot gold was down 2% at $4,038.89 per ounce as of 11:19 am ET (1519 GMT), after rising to as much as $4,161.17 earlier in the session, according to Reuters. US gold futures for December delivery fell 1.3% to $4,055.40 per ounce.

Adnan Agar, Director at Interactive Commodities, said global gold prices continued to face pressure, with the metal hitting a low of $4,003 before rebounding to $4,161 and later retreating to around $4,027.

"There is strong support at $4,000," Agar noted. "If the market sustains this level, it could rebound towards $4,200. However, if it fails to hold, we might see levels near $3,940."

He added that despite the ongoing pressure, the broader bullish trend in gold remains intact. "Only if prices fall below $3,900, we would see a temporary break in the bullish trend, possibly triggering a deeper correction towards $3,500-$3,600," he explained.

Agar said that market sentiment will depend on US economic indicators due later this week. "Friday's US inflation report and next week's monetary policy decision will be crucial for determining the next direction for gold," he said.

Gold prices have notched multiple record highs and gained 54% this year, bolstered by geopolitical tensions, economic uncertainty, expectations of US rate cuts and strong inflows into exchange-traded funds (ETFs). Prices fell 5.3% on Tuesday, after hitting a record high of $4,381.21 in the preceding session.

Meanwhile, the Pakistani rupee recorded a slight appreciation against the US dollar in the inter-bank market on Wednesday. According to data released by the State Bank of Pakistan (SBP), the local currency closed at 281.05 per dollar, gaining Rs0.01 from the previous day's close at 281.06.

In global markets, the US dollar eased in early Asian trading, retreating from a one-week high against the Japanese yen as a sharp drop in gold prices prompted rebalancing among safe-haven assets.