Gold falls despite global surge

Down Rs5,600/tola; buying stays strong in China and Ghana amid volatility

KARACHI:

Gold prices in Pakistan declined on Tuesday despite the fact that the global market surged more than 2% after softer-than-expected US inflation data boosted hopes of a less hawkish stance by the Federal Reserve.

According to the All-Pakistan Gems and Jewellers Sarafa Association, gold per tola was quoted at Rs424,136 after falling Rs5,600 during the day. The 10-gram price dropped Rs4,801 to Rs363,628. On Monday, the per-tola rate had closed at Rs429,736 following a decline of Rs3,800. Silver prices in the local market also eased, falling Rs50 to Rs6,289 per tola. The sharp rebound in international prices was driven mainly by the US inflation data for June that came in softer than market expectations. The headline Consumer Price Index cooled to 3.5% year-on-year from 4.2% in May, while core inflation eased to 2.6%. The improvement, largely fuelled by a significant drop in energy prices, prompted traders to reduce bets on aggressive rate hikes by the Federal Reserve. Spot gold rose 1.6% to $4,063.15 per ounce, while US gold futures also gained 1.6% to $4,070.30. The US dollar fell 0.6%, making dollar-denominated bullion more affordable for holders of other currencies.

New Fed Chair Kevin Warsh, however, reiterated the central bank's commitment to bringing inflation back to its 2% target, indicating that policymakers remained cautious despite the softer print. Markets are now awaiting the US Producer Price Index data due on Wednesday for further direction on price trends. Escalating geopolitical tensions between the United States and Iran added further support to gold's safe-haven appeal. The two countries launched fresh attacks on each other, heightening concerns over regional stability and potential disruptions to shipping routes in the Strait of Hormuz. Such developments have historically supported gold prices during periods of heightened uncertainty.

Broader market support also came from sustained official sector buying. Ghana's Gold Board purchased up to 54 metric tons of gold from artisanal and small-scale miners in the first half of 2026. Output from the sector is on track to match or surpass last year's record, helping underpin foreign exchange inflows and supporting an economy emerging from its worst financial crisis in decades.

This follows a similar trend seen in other emerging markets where central banks continue to accumulate gold as a strategic reserve asset.

The People's Bank of China purchased 15 tonnes of gold, its largest monthly buy since October 2023, extending its record 20-month buying streak. Despite a weak June that erased H1 gains, Chinese gold ETFs recorded strong inflows for the first half. Wholesale demand rebounded month-on-month but remained below the 10-year average due to subdued jewellery consumption.

Meanwhile, the Pakistani rupee settled at 278.01 against the dollar on Tuesday, gaining Rs0.01 from Monday's close at 278.02.