Gold drops Rs10,400 per tola as global prices come under pressure

ISLAMABAD: Gold prices in Pakistan fell sharply on Tuesday in line with losses in the international market, where a stronger US dollar and growing expectations of a US Federal Reserve interest rate increase weakened demand for the precious metal.

According to rates issued by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), gold in the local market declined by Rs10,400 per tola, settling at Rs432,236. The price of 10 grams of gold also dropped by Rs9,360 to Rs368,985.

The fall followed a gain a day earlier, when gold had risen by Rs4,643 per tola to close at Rs442,636 on Monday.

International market weakens

In the global market, spot gold was down 1.2% at $4,138.79 per ounce by 1545 GMT, while US gold futures for August delivery slipped 1.1% to $4,156.40 per ounce, according to Reuters.

Market participants linked the weakness in gold to the dollar climbing to its highest level in more than a year. A stronger dollar makes gold costlier for buyers using other currencies and tends to reduce its appeal as a safe-haven investment.

Analysts also said that progress in talks between the United States and Iran, along with Washington’s decision to waive certain oil-related sanctions on Iran, helped ease worries about energy prices and inflation. That, in turn, reduced support for gold.

Traders watch US data

Investors are now looking to US Personal Consumption Expenditures data due on Thursday for further signals on the Federal Reserve’s policy path.

Interactive Commodities Director Adnan Agar said gold remained under pressure throughout the session. He said the metal touched an intraday high of $4,200 per ounce and a low of $4,090 before trading in the $4,130-$4,137 range. He added that the market was still showing weakness and could face more downside if key support levels were broken.

Silver prices in the domestic market also moved lower, falling by Rs487 per tola to Rs6,664.

Separately, the rupee posted a marginal gain of Re0.01 against the US dollar in the interbank market on Tuesday, closing at 278.21 compared with 278.22 a day earlier.