Gold steady as Fed hints at rate hike

Gold prices in Pakistan remained unchanged on Friday even as international bullion reversed course and fell more than 1% after Federal Reserve Chairman Kevin Warsh signalled the US central bank may still have "work to do" on inflation.

The All-Pakistan Gems and Jewellers Sarafa Association (APGJSA) quoted 24-karat gold at Rs483,036 per tola, the same level as Thursday's close. Ten-gram gold was also unchanged at Rs414,125.

On Thursday, the local rate had dropped Rs3,500 per tola during the session before settling at the same Rs483,036 mark.

Silver moved higher, rising Rs180 to Rs7,509 per tola.

Global gold retreats on rate-hike bets

Spot gold was down 0.8% at $4,563.05 an ounce by 1452 GMT after touching a one-week low of $4,528.94 earlier in the session, according to Reuters. US gold futures for December delivery fell 1% to $4,615.10. Warsh told the Jackson Hole symposium on Friday that US inflation remains too high and that the central bank still has work to do if prices fail to move clearly toward the 2% target.

The Fed's preferred PCE measure stood at 3.7% in July, he said. He described progress over the past two years as modest and said recent readings do not show a meaningful improvement in underlying trends. About half the items in the PCE basket still rise at more than a 3% annual rate.

"We must be confident that underlying inflation is moving to our objective, clearly and at sufficient speed. Otherwise, we have work to do," he said. He called the 2% target firm and fixed and said prices should remain the Fed's predominant focus. Adnan Agar, Director at Interactive Commodities, noted that Warsh did not forecast a rate cut. He said current policy does not look highly restrictive. The federal funds rate has stayed in the 3.50%-3.75% range since December, and credit and loan markets show few signs of restraint.

Markets raised the chance of a September hike to around 55% after the speech. The dollar strengthened and Treasury yields rose. Energy prices tied to the Iran conflict and new tariff measures add to inflation risks, with other Fed officials also flagging those pressures.

Commodities

Agar further highlighted that gold usually weakens when markets price higher US rates and a stronger dollar. Geopolitical tension and sticky inflation still support bullion as a safe haven.

Silver saw profit-taking ahead of the speech and US inflation data, which put short-term pressure on prices.

Brent crude traded below $93 a barrel and later slipped further toward the high $80s as traders booked profits and weighed talk of tighter US sanctions on Iran. Any fresh disruption in the Middle East can quickly lift oil again, he said.

Meanwhile, the Pakistani rupee closed Friday at 277.50 against the US dollar, up Rs0.01 from Thursday's 277.51 settlement, as the greenback held flat near a one-week high versus major peers.