Gold drops Rs6,800 despite global rally

Tumbles on lag effect; international prices climb amid Iran hopes; rupee inches up

KARACHI:

Gold prices in the Pakistani market on Wednesday registered a notable decline, even as international spot gold climbed nearly 1% amid hopes of a swift resolution to the US-Iran conflict.

According to the All-Pakistan Gems and Jewellers Sarafa Association, the price of gold per tola dropped Rs6,800 to settle at Rs470,362. Similarly, the 10-gram gold fell Rs5,830 to Rs403,259. On Tuesday, the price per tola had remained stable at Rs477,162.

The local market often receives international cues with a lag. While global prices showed strength on Wednesday, the international market had softened the previous day, influencing domestic rates the next day. Internationally, spot gold rose 1% to $4,525.95 per ounce by 10:35 am ET. Prices had earlier touched their lowest level in more than seven weeks before recovering, according to Reuters. The uptick was driven by easing geopolitical concerns surrounding the US and Iran, which pressured oil markets lower, reduced inflation fears, and pulled US Treasury yields down from recent highs.

President Trump reiterated that any conflict with Iran would conclude "very quickly," adding to market optimism around de-escalation. Investors are also closely monitoring US monetary policy, with a 48.6% probability now assigned to a Federal Reserve rate hike in December. Minutes from the Fed's April FOMC meeting were scheduled for release later on Wednesday, which could provide further direction on rate trajectories. Adnan Agar, Director at Interactive Commodities, shared insights on the global movement: The gold market hit a low of $4,445 and a high of $4,555. It stood at $4,528 at the time of filing this report.

After an initial dip, it moved higher on news that a US-Iran deal is in finalisation mode. Such reports surface every 10-15 days but rarely materialise immediately. "Still, markets react," he said. Positive developments between the US and Iran could push gold further up. "Conversely, weaker US bond yields and decreasing oil prices, if crude prices decline back towards $90-92/barrel, could lift gold towards $4,600," he added.

Market analysts note that gold continues to balance between geopolitical risk premiums and macroeconomic factors like US yields and oil dynamics. Any concrete progress on the Iran front or hawkish signals from the Fed could trigger fresh volatility in the coming sessions.

Meanwhile, silver prices in Pakistan decreased Rs125, reaching Rs7,974 per tola. The Pakistani rupee closed at 278.56, edging up Rs0.01 against the greenback. On Tuesday, it had settled at 278.57.

The US dollar remained largely steady near a six-week high as investors adjusted to the prospect of higher interest rates to combat rising inflation caused by the Middle East war. The British pound stood at $1.3398, hovering close to a six-week low reached earlier this week.