Gold drops as Fed lifts rate-hike bets

Local bullion falls Rs1,800 to Rs466,136 per tola after global sell-off

KARACHI:

Gold prices in Pakistan declined on Monday, moving in line with a sharp reversal in the international market. Bullion fell more than 3% on Friday after traders raised bets on a possible US interest rate hike.

In the local market, 24-carat gold was quoted at Rs466,136 per tola after a drop of Rs1,800 during the day, according to rates issued by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA). Ten-gram gold sold at Rs399,636, down Rs1,543.

The Monday decline followed a steeper correction on Saturday, when the tola price fell Rs15,100 to Rs467,936.

Spot gold was down 2.9% at $4,567.23 an ounce by 1744 GMT, its lowest level since August 20, according to Reuters. US gold futures for December delivery settled 2.9% lower at $4,529.90.

The sell-off came after Federal Reserve Chairman Kevin Warsh said there was "more work to do" on bringing inflation down. Those remarks lifted expectations of tighter policy and sent the dollar to a more than one-week high. A stronger dollar typically weighs on gold, which pays no yield.

Pakistan's gold market closely tracks international prices, with local rates also reflecting the rupee and demand from jewellers and investors.

Silver moved in the opposite direction. Its price rose Rs67 to Rs7,179 per tola.

The Pakistani rupee closed Monday at 277.47 against the US dollar, gaining Rs0.03 from Friday's close of 277.50.