Gold slides as dollar firms ahead of Fed decision

Gold prices in Pakistan decreased on Wednesday, tracking losses in the international market, as a firmer US dollar and elevated Treasury yields weighed on bullion ahead of the Federal Reserve rate decision.

According to the All-Pakistan Gems and Jewellers Sarafa Association, the price of gold per tola fell Rs1,000 to close at Rs426,436. Ten-gram gold was quoted at Rs365,600, down Rs857. On Tuesday, gold had slipped by Rs4,300.

In the global market, spot gold dropped 0.5% to $4,008.11 per ounce by 11:40 am EDT (1540 GMT). US gold futures for August delivery lost 0.8% to $4,006.20. Yields on the benchmark 10-year US Treasury note edged higher, while the dollar strengthened, making bullion more expensive for holders of other currencies.

Investors were largely in a wait-and-see mode ahead of the Federal Open Market Committee (FOMC) decision due at 2 pm EDT. Market participants will closely parse the policy statement and remarks from Fed Chair Kevin Warsh for clues on the future path of interest rates.

Interactive Commodities Director Adnan Agar noted that gold traded in a range with a high of $4,047 and a low of $3,995, later hovering around $4,011. "The market is waiting for the FOMC decision. It is being eagerly awaited and is very crucial," he said.

Agar outlined possible scenarios: a surprise rate hike or a hawkish tone without a hike could push gold lower, while a dovish stance with no rate increase would likely trigger a rally.

"The combination of the oil price bounce triggering higher yields due to attempted Iranian strikes on US bases overnight and last-minute jitters ahead of the Fed result has put gold under pressure," said Tai Wong, an independent metals trader. "There is important support at $3,950 with stop-losses below; a sustained price action under that will trigger deeper losses." Silver, however, moved in the opposite direction in the local market, rising Rs68 to Rs6,291 per tola. Oil prices also gained ground amid escalating US-Iran tensions following strikes in Iraq, adding another layer of geopolitical uncertainty that often supports safe-haven assets over the longer term.

Meanwhile, the Pakistani rupee closed slightly stronger on Wednesday, gaining Rs0.03 to settle at 277.82 against the US dollar in the inter-bank market. A day earlier, the local currency had closed at 277.85. The dollar held near a one-month high in global markets as fresh hostilities flared in the Middle East, while traders awaited the Federal Reserve's rate decision later in the day. FOMC left the rate unchanged.