Gold extends losses on US rate concerns

Price drops Rs4,900/tola, heading for weekly decline on fears of tighter Fed policy

KARACHI:

Gold prices in Pakistan declined for the second consecutive session on Friday, shedding Rs4,900 per tola, as the precious metal remained under pressure in international markets amid expectations of further US monetary tightening and persistent geopolitical uncertainty.

In the local market, gold price per tola fell to Rs411,636, while the price of 10-gram gold decreased by Rs4,201 to Rs352,911, according to rates released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).

The latest decline followed Thursday's sharp correction, when gold lost Rs10,900 per tola to settle at Rs416,536.

Silver prices also weakened, falling Rs111 to Rs5,467 per tola in the domestic market.

Internationally, spot gold edged up 0.2% to $3,885.09 per ounce by 11:35am ET, after briefly touching an intraday high of $3,922.97 following the release of US producer price data, according to Reuters.

US gold futures for December delivery gained 0.1% to $3,888.90 per ounce.

However, the modest recovery did little to offset the metal's broader losses, with spot gold down more than 4% so far this week, putting it on track for its steepest weekly decline since early June. Silver, platinum and palladium were also heading for weekly losses.

US producer prices for final demand increased 0.3% in October, following an upwardly revised 1.4% surge in September. The latest increase was below the 0.4% rise expected by economists in a Reuters poll, easing some concerns about stronger-than-anticipated inflation.

Adnan Agar, Director of Interactive Commodities, said international gold prices could face further downward pressure, potentially testing the $3,700-$3,600 range in the coming sessions.

He said gold had touched a high of $3,923, while the market was trading around $3,877, with support near $3,860.

According to Agar, a decline towards $3,600-$3,700 could provide a temporary pause, potentially followed by a recovery towards $3,900 before another downward move.

He identified the Federal Reserve's December monetary policy decision and developments involving Iran and the United States as key factors shaping market sentiment.

Any de-escalation in geopolitical tensions could alter the outlook, while continued uncertainty and expectations of tighter US monetary policy could weigh on bullion.

Meanwhile, the rupee appreciated Rs0.01 to close at Rs276.60 against the US dollar on Friday, compared with Thursday's closing rate of Rs276.61.