Gold falls Rs1,600 tracking global decline

Strong dollar, inflation fears hit bullion; US-Iran talks collapse also weighs in

KARACHI:

Gold prices in Pakistan declined on Monday, tracking losses in the international market, as a stronger US dollar and renewed inflation concerns dampened investor sentiment following the collapse of US-Iran peace talks over the weekend.

In the local market, the price of gold per tola fell by Rs1,600 to settle at Rs495,362, according to data released by the All-Pakistan Gems and Jewellers Sarafa Association. Similarly, the price of 10 grams of gold dropped by Rs1,371 to Rs424,693. Internationally, spot gold slipped 0.8% to $4,711.24 per ounce as of 11:36 am ET, after touching its lowest level since April 7 earlier in the session. Meanwhile, US gold futures declined 1.1% to $4,733.40 per ounce, as reported by Reuters.

Market participants attributed the decline primarily to a strengthening US dollar, which makes dollar-denominated commodities like gold more expensive for holders of other currencies, thereby reducing demand. Additionally, persistent inflationary concerns have clouded expectations for near-term interest rate cuts by the US Federal Reserve, further weighing on gold prices.

Commenting on market dynamics, Interactive Commodities Director Adnan Agar noted that gold opened lower amid geopolitical tensions but showed some recovery during the day. The market opened around $4,670, dipped to a low of $4,664, and later climbed to a high of $4,744. It was hovering near $4,710, he said, adding "while short-term weakness persists, the broader trend remains cautiously positive."

Meanwhile, silver prices in the domestic market also recorded a decline, falling by Rs130 to Rs7,934 per tola, mirroring a more than 2% drop in global silver prices. Analysts believe that geopolitical developments, particularly tensions involving Iran, along with currency movements and inflation outlook, will continue to drive bullion market trends in the coming days.

Meanwhile, the Pakistani rupee edged higher against the US dollar in the inter-bank market on Monday, closing at 279 compared to 279.01 on Friday.