Gold price in Pakistan rose for a second straight session on Tuesday, tracking gains in the international market as investors weighed higher oil prices and the outlook for US interest rates.
The price of gold climbed Rs2,400 per tola to Rs459,736, according to rates released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA). The price of 10-gram gold also increased by Rs2,050 to Rs394,149.
Gold had gained Rs800 per tola on Monday, when it closed at Rs457,366.
In the international market, gold was up $24 at $4,373 per ounce, including a $20 premium.
Silver also moved higher in the local market, with its price rising Rs62 to Rs6,965 per tola.
Global gold market
International gold prices came under pressure after touching a more than two-month high earlier on Tuesday. Rising oil prices and fading hopes of a US-Iran peace deal raised concerns that inflation could stay high and interest rates may remain elevated.
Spot gold was down 0.4 percent at $4,371.92 an ounce by 0855 GMT after reaching $4,434.84 earlier, its highest level since June 5. US gold futures, however, rose 0.3 percent to $4,430.80.
Higher US Treasury yields also weighed on bullion by increasing the opportunity cost of holding an asset that does not pay interest.
“The rise in oil prices has provided a boost to US Treasury yields, which is weighing on gold prices,” said Hamad Hussain, a climate and commodities economist at Capital Economics.
Oil prices gained after US President Donald Trump responded to Iran’s conditions for a peace deal by demanding compensation from Tehran for people killed in wars, attacks and protests. His remarks added to uncertainty over efforts to reopen the Strait of Hormuz.
A prolonged rise in oil prices could add to inflation and make it harder for central banks to cut rates. That could reduce demand for gold as investors favour interest-bearing assets.
Markets are now pricing in a 52 percent chance of a US interest rate hike in September, up from 44 percent a day earlier, according to the CME FedWatch Tool.
Cleveland Federal Reserve Bank President Beth Hammack said on Monday that she believed rates should start rising gradually to avoid the need for sharper increases later.
Investors are now looking to US consumer price data due on Wednesday and producer price data expected on Thursday for fresh clues about the Federal Reserve’s next move.
Hussain said a stronger-than-expected inflation reading could strengthen the case for a rate hike at the Fed’s next meeting and put further pressure on gold.
In other precious metals, spot silver fell 1.5 percent to $64.74 an ounce, while platinum rose 0.4 percent to $1,760.15. Palladium declined 0.4 percent to $1,377.81.