Gold falls Rs6,500 a tola as dollar firms

Rate drops to Rs429,136, though spot gold is still up 4.5% this week, rupee inches up

KARACHI:

Gold prices in Pakistan declined sharply on Friday, shedding Rs6,500 per tola as international bullion markets came under pressure from a stronger US dollar and rising Treasury yields following stronger-than-expected US employment data.

In the local market, gold prices fell to Rs429,136 per tola, while the price of 10-gram gold decreased by Rs5,573 to Rs367,914, according to rates released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).

The decline followed a Rs9,600 per tola increase on Thursday, when domestic gold prices had climbed to Rs435,636.

International spot gold fell 1% to $4,047.10 per ounce by 8:46am ET, after touching an intraday low of $4,033.29. US gold futures for December delivery also declined 1.4% to $4,057.20 per ounce.

The US dollar strengthened 0.7% to its highest level since October 29, making dollar-denominated bullion more expensive for holders of other currencies. Benchmark 10-year US Treasury yields also advanced, adding pressure on the precious metal.

Spot gold, however, remained up 4.5% for the week, putting it on track for its strongest weekly performance since late August.

Interactive Commodities Director Adnan Agar said international gold prices had fluctuated between a high of $4,109 and a low of $4,029, with the market trading around $4,050.

He said the direction of global equity markets on Monday could play an important role in determining gold's near-term movement.

He cautioned that a possible sharp correction in international stock markets could put additional downward pressure on gold, as investors facing margin calls might sell their bullion holdings to generate liquidity.

When asset prices fall, leveraged investors are often required to deposit additional funds to maintain their positions. To meet these margin requirements, they may liquidate other holdings, including gold, potentially increasing selling pressure on the precious metal.

He described a possible Monday sell-off in global equity markets as a risk rather than a certainty, adding that investors would need to monitor market developments.

If equity markets avoid a correction, however, gold could gradually regain upward momentum as prices begin to stabilise, he said.

Agar added that gold had previously touched a low of around $3,850 during the year and had not fallen below that level since, making the coming sessions important for determining its next direction.

Silver prices in the domestic market declined by Rs85 per tola to Rs5,678.

The rupee gained Rs0.01 to close at 276.66 against the US dollar on Friday, compared with Thursday's closing rate of 276.67.