Strong dollar, rising yields push gold lower
Gold prices in Pakistan extended their decline on Tuesday, tracking losses in the international market, as a stronger US dollar and rising Treasury yields weighed on bullion, while investors remained cautious ahead of developments in tentative US-Iran talks and the confirmation hearing of Federal Reserve chair nominee Kevin Warsh.
In the local market, the price of gold per tola fell by Rs1,000 to settle at Rs500,162. Similarly, the price of 10-gram gold decreased by Rs857 to Rs428,808, according to rates issued by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).
The latest decline follows a drop in the previous session, when gold prices had fallen by Rs4,900 per tola to close at Rs501,162, indicating heightened volatility in the domestic bullion market.
Silver prices also moved lower, with per-tola rate decreasing by Rs59 to reach Rs8,358. In the international market, spot gold dropped 2% to $4,724.31 per ounce during US trading hours, hitting its lowest level in over a week, according to Reuters. Meanwhile, US gold futures for June delivery declined 1.8% to $4,743.50.
Market sentiment remained under pressure as the US dollar strengthened, making dollar-denominated gold more expensive for investors holding other currencies. At the same time, the benchmark 10-year US Treasury yields rose more than 1%, further reducing the appeal of non-yielding assets such as gold.
Adnan Agar, Director at Interactive Commodities, noted that gold traded within a wide range during the session, touching a high of $4,830 and a low of $4,707, and was hovering near session lows amid uncertainty surrounding geopolitical developments.
He said ambiguity about the status of US-Iran talks had created a "drama-like" situation in the market, with conflicting signals dampening investor confidence. Reports suggest that US President Donald Trump may address the issue ahead of a ceasefire deadline, with speculation about a possible extension to allow further negotiations.
However, Agar cautioned that even an extension in the ceasefire may not necessarily support markets, as intermittent escalations could continue. He added that, historically, such negotiations tend to be prolonged, citing the Iran nuclear deal under former US president Barack Obama, which took nearly two years to finalise.
Despite short-term weakness, Agar maintained a bullish outlook, stating that as long as gold holds above the $4,580 level, prices are likely to resume an upward trajectory.
Separately, Uganda's central bank announced it has begun purchasing gold from domestic producers as part of a strategy to diversify foreign exchange reserves, as per Reuters.
Meanwhile, the Pakistani rupee gained a marginal Rs0.01 against the US dollar on Tuesday, closing at 278.90 in the inter-bank market. Additionally, the State Bank of Pakistan received a $1 billion deposit from Saudi Arabia's Ministry of Finance.