Gold falls Rs6,800 in Pakistan as local market tracks earlier global weakness

LAHORE: Gold prices in Pakistan moved lower on Wednesday, with the domestic market reflecting the previous session’s softness in international bullion rates even as global spot gold recovered during the day.

The price of gold per tola declined by Rs6,800 to Rs470,362. The rate for 10 grams of gold also dropped by Rs5,830 to Rs403,259.

On Tuesday, the per tola price had remained unchanged at Rs477,162. The local market often responds to international price movements with a delay, which meant that the weakness seen globally a day earlier was passed on to domestic prices on Wednesday despite a rebound in the international market.

International market rebounds

In the global market, spot gold was up 1% at $4,525.95 per ounce by 10:35am ET. Earlier in the session, prices had touched their lowest level in more than seven weeks before recovering.

The recovery was linked to hopes of a quick easing in tensions involving the United States and Iran. Lower oil prices, reduced inflation concerns and a pullback in US Treasury yields from recent highs also supported bullion.

President Trump said any conflict with Iran would conclude "very quickly".

Investors were also watching the US monetary policy outlook. Markets were assigning a 48.6% probability to a Federal Reserve rate hike in December, while minutes of the Fed’s April FOMC meeting were due later on Wednesday and were expected to offer further clues on the path of interest rates.

Analyst view on price movement

Adnan Agar, director at Interactive Commodities, described the day’s movement in the international gold market and linked it to developments surrounding the US-Iran situation. "The gold market hit a low of $4,445 and a high of $4,555. It stood at $4,528 at the time of filing this report. After an initial dip, it moved higher on news that a US-Iran deal is in finalisation mode. Such reports surface every 10-15 days but rarely materialise immediately."

Agar added that markets still respond to such developments.

He also said that favourable developments between Washington and Tehran could support further gains in gold prices. "Conversely, weaker US bond yields and decreasing oil prices, if crude prices decline back towards $90-92/barrel, could lift gold towards $4,600," he added.

Market participants, continue to weigh geopolitical risks against broader macroeconomic factors including US bond yields and oil price trends, with any firm progress on Iran or a hawkish signal from the Federal Reserve likely to influence near-term volatility.

Silver and currency update

Silver prices in Pakistan also registered a decline, falling by Rs125 to Rs7,974 per tola.

Meanwhile, the Pakistani rupee closed at 278.56 against the US dollar, improving by Re0.01 from Tuesday’s close of 278.57.

The US dollar was broadly steady near a six-week high as investors adjusted to the possibility of higher interest rates aimed at containing inflation linked to the Middle East war. The British pound was at $1.3398, close to a six-week low touched earlier in the week.