Gold prices in Pakistan dropped sharply on Tuesday, tracking losses in the international market as the US dollar strengthened and investors reassessed risks linked to tensions in the Middle East.
In the local market, the price of gold per tola fell by Rs13,900 to settle at Rs549,962, according to rates shared by the All-Pakistan Gems and Jewellers Sarafa Association. The price of 10 grams of gold also declined by Rs11,917 to Rs471,503.
The fall came a day after gold had climbed strongly. On Monday, the price per tola had risen by Rs13,300 to close at Rs563,862. Traders said the sharp swings reflect uncertainty in global markets, where prices are reacting quickly to political and economic signals.
In the international market, gold prices dropped by $139 to $5,272 per ounce, including a $20 premium. Spot gold was down 1.4 percent at $5,252.05 an ounce by 0931 GMT, while US gold futures for April delivery slipped 0.9 percent to $5,263.80.
A stronger US dollar weighed on prices. The currency rose to a more than one month high, making gold more expensive for buyers using other currencies. Analysts said investors are now paying closer attention to inflation risks linked to the ongoing US and Israeli military action against Iran. Higher inflation expectations could lead to tighter monetary policy, which usually puts pressure on gold as it does not offer interest.
Markets widely expect the US Federal Reserve to keep interest rates unchanged at the end of its meeting on March 18. The chances of rates remaining on hold in June have also increased in recent days.
Meanwhile, silver prices in Pakistan also declined. The rate per tola fell by Rs1,146 to Rs8,904.
Despite the recent drop, some analysts believe gold could climb again if geopolitical tensions rise further and investors seek safety in precious metals.
