Gold prices in Pakistan dropped sharply on Tuesday, following a strong decline in international markets, as investors reacted to global economic and political developments.
In the local market, the price of gold per tola fell by Rs8,900 to settle at Rs485,062. Similarly, the rate for 10 grams dropped by Rs7,630, closing at Rs415,862, according to the All-Pakistan Gems and Jewellers Sarafa Association.
The decline comes a day after gold had seen a modest rise. On Monday, the per tola price had increased by Rs800 to reach Rs493,962, showing how quickly sentiment has shifted.
Global pressure weighs on gold
In the international market, gold prices also moved lower, falling by $89 to $4,627 per ounce. During the day, prices touched a three-week low, reflecting uncertainty among investors.
Market watchers say rising oil prices and ongoing tensions in the Middle East are shaping investor behaviour. Oil prices moved above $111 per barrel as supply concerns remained due to disruptions in key shipping routes.
Higher oil prices often lead to increased inflation, as transport and production costs rise. This can push central banks to keep interest rates high. When interest rates are elevated, investors tend to move towards assets that offer returns, which reduces the appeal of gold.
At the same time, the US dollar strengthened, adding further pressure on gold prices globally.
Focus shifts to central banks
Investors are now closely watching major central banks for signals on future interest rates. The US Federal Reserve is expected to keep rates unchanged, while decisions from the European Central Bank, the Bank of England and the Bank of Canada are also due this week.
In Asia, the Bank of Japan kept its policy rate unchanged, although some policymakers showed concern about rising inflation.
Analysts believe geopolitical developments, particularly tensions involving the US and Iran, will continue to influence gold prices in the coming days.
Meanwhile, silver prices in Pakistan fell by Rs238 to Rs7,811 per tola.
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