Gold steady despite US-Iran tensions

Rises Rs900/tola, though international markets fall on producer price data; rupee inches up

RATODERO/KARACHI:

Gold prices in Pakistan posted gains, although marginal, on Wednesday, bucking the softer trend in international markets, where the precious metal trimmed losses following an unexpected drop in US producer prices.

According to the All-Pakistan Gems and Jewellers Sarafa Association, the price of gold per tola rose Rs900 to reach Rs425,036. Similarly, the 10-gram gold was sold at Rs364,399 after an increase of Rs771.

The rebound comes after a sharp decline on Tuesday, when gold per tola dropped Rs5,600 to settle at Rs424,136. The domestic uptick in prices reflects sustained local demand despite volatility in global benchmarks.

On the international front, spot gold eased 0.2% to $4,047.27 per ounce by 11:35 am EDT (1535 GMT), having fallen nearly 1% earlier in the session, as per Reuters. US gold futures declined 0.4% to $4,053.70.

The metal faced pressure after the US Producer Price Index (PPI) fell 0.3% in June, offering some relief on inflation concerns. However, worries about persistent inflationary pressures and elevated rates lingered.

Traders currently assign only a 10.2% probability of a Federal Reserve rate hike at its July meeting. Meanwhile, escalating geopolitical risks provided some support. The US has initiated a new wave of strikes against Iran, heightening concerns over potential disruptions in global energy supplies.

Silver prices in the local market remained stable at Rs6,289 per tola. Interactive Commodities Director Adnan Agar noted that gold was trading slightly lower again. "The market was trading at $4,030. Wednesday's high for gold was $4,075, and the low was $4,017. There was downward pressure on gold, but it was also finding support near $4,000," he said.

Agar added that developments in the coming days would be critical. "Let's see if US-Iran tensions escalate further and crude oil, currently at $84, crosses this level and moves towards $90 or $94. Then there are chances for gold to come under further pressure," he observed.

Analysts believe the interplay between the US monetary policy signals, producer price data, and Middle East tensions will continue shaping gold's trajectory. A potential spike in oil prices due to supply risks could influence safe-haven demand for the yellow metal, though stronger-than-expected US economic data might keep interest rates higher for longer, capping gains.

Meanwhile, the Pakistani rupee held steady at 278.00 against the US dollar in the inter-bank market, up Rs0.01 from the previous close.