Gold sheds Rs14,000 on global weakness

Gold prices in Pakistan extended their decline on Tuesday, mirroring weakness in the international bullion market, as investors awaited the US Federal Reserve's policy decision and optimism around US-China trade talks reduced safe-haven demand.

According to data shared by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold per tola fell by Rs14,000 to Rs416,362, while the rate for 10 grams dropped by Rs12,003 to Rs356,963. On Monday, gold had already slipped by Rs3,300 per tola to Rs430,362.

In the global market, gold touched a three-week low of $3,886 per ounce before recovering slightly to $3,963. Adnan Agar, Director at Interactive Commodities, said the market has been under pressure due to heavy selling in recent days.

"Gold dropped further and hit a low of $3,886. Later, the market was at $3,963. After short-covering, it has gone up a bit, but the overall trend remains weak," Agar said. "The market may re-test the $4,000 level before heading back downwards, possibly correcting further towards $3,850-3,800."

He added that traders are now focused on the Federal Reserve's interest rate decision expected late Wednesday night, which will likely determine gold's next major price range.

Spot gold was down 0.4% at $3,963.50 per ounce as of 12:15 pm EDT (1615 GMT), after hitting its lowest level since October 6. US gold futures lost 1% to $3,978.30 per ounce, according to Reuters.

Gold, a traditional hedge during times of uncertainty and a non-yielding asset, has gained more than 51% this year, bolstered by ongoing geopolitical and trade tensions as well as expected US rate cuts.

Meanwhile, South Korea's central bank is reportedly considering gold purchases for reserves in the medium to long term, Heung-Soon Jung, Head of Reserve Investment Division at the Bank of Korea told a precious metals conference on Tuesday.

South Korea has not bought any gold to add to its 104 metric tons of reserves since 2013, in contrast with some other central banks, such as China's, which have been active buyers since 2022 to diversify their reserves, supporting the gold price.

The price of gold is expected to hit $4,980 a troy ounce over the next 12 months, up some 27% from current levels, delegates to the London Bullion Market Association's annual gathering in Kyoto predicted on Tuesday.

On track for its biggest yearly rise since 1979, gold's 52% growth so far this year has seen it break through $3,000 per troy ounce in March and then $4,000 in October – both seen as psychological resistance levels by market players.

The Pakistani rupee reached a nearly six-month high against the US dollar in the inter-bank market on Tuesday, continuing its steady upward trend that has persisted for several months.

According to the State Bank of Pakistan (SBP), the rupee closed at 280.97 against the dollar, appreciating by Rs0.04 from Monday's rate of 281.01.

The local currency has been posting modest daily gains over recent weeks, trading within a narrow range of a few paisas per session. The rupee last stood below the 281 level on April 30, 2025.