Gold falls Rs7,000 as bullion hits 3-month low

Gold prices in Pakistan fell sharply on Friday, shedding Rs7,000 per tola as international bullion prices dropped to a three-month low amid rising inflation concerns and expectations of higher US interest rates.

The price of gold per tola declined to Rs424,536 in the local market, according to rates released by the All-Pakistan Gems and Jewellers Sarafa Association.

Similarly, the price of 10-gram gold decreased by Rs6,001 to Rs363,971. On Thursday, gold had already fallen by Rs3,000 per tola to Rs431,536.

Internationally, spot gold fell 0.6% to $4,000.59 per ounce by 1520 GMT, after briefly slipping below the $4,000 threshold for the first time since mid-July. Prices touched an intraday low of $3,975.23 per ounce, as per Reuters.

Bullion had declined around 4% during the week, putting it on course for its steepest weekly loss since June. US gold futures for December delivery also dropped 1.1% to $4,014.60 per ounce.

Rising energy prices have heightened concerns about inflation, strengthening expectations that US interest rates could remain elevated. Higher interest rates tend to weigh on gold, which does not pay interest, by making yield-bearing assets more attractive.

Brent crude touched a more than five-month high after Houthi attacks in Saudi Arabia raised concerns about further disruptions to energy supplies. Higher oil prices could add to inflationary pressures and complicate the outlook for monetary policy.

Investors are also awaiting the US Federal Reserve's interest-rate decision and personal consumption expenditure inflation data due next week, which could influence expectations for the future path of monetary policy.

Meanwhile, silver prices in Pakistan declined by Rs221 per tola to Rs5,865.

In India, gold demand strengthened as lower prices encouraged purchases ahead of the festive season, highlighting how price declines can support physical demand even as global financial conditions weigh on bullion.

Meanwhile, the Pakistani rupee continued its marginal gains against the US dollar on Friday, appreciating by Re0.03 in the interbank market to close at 276.82, compared with Thursday's closing rate of 276.85.