Gold prices in Pakistan dropped sharply on Monday, following losses in the international market as investors reacted to rising oil prices and uncertainty over the Middle East conflict.
In the local market, the price of gold per tola fell by Rs5,300 to settle at Rs488,362, according to rates issued by the All-Pakistan Gems and Jewellers Sarafa Association.
The price of 10-gram gold also declined by Rs4,544, closing at Rs418,691.
The latest drop came after gold had already lost Rs400 per tola on Saturday, when it closed at Rs493,662.
Internationally, gold prices also remained under pressure. The global rate declined by $53 to $4,660 per ounce, including a premium of $20.
Silver prices, however, stayed unchanged in Pakistan at Rs8,513 per tola.
Global gold market under pressure
In the international market, spot gold slipped more than 1 percent to around $4,665 per ounce, while US gold futures also moved lower.
Market analysts said investors remained worried that high oil prices could keep inflation elevated and reduce chances of interest rate cuts in the US.
Concerns over the ongoing tensions involving the US, Israel and Iran also continued to affect investor sentiment. Oil prices climbed above $103 per barrel amid fears that disruption in the Strait of Hormuz could continue for longer than expected.
Analysts said rising oil prices often increase inflation concerns, which can push central banks to keep interest rates high. Higher rates usually make non-yielding assets like gold less attractive to investors.
Han Tan, chief market analyst at Bybit, said the market remained focused on stalled peace efforts between the US and Iran, while inflation fears were still weighing on investor confidence.
Gold has now dropped more than 11 percent since tensions linked to the US-Israeli conflict with Iran intensified earlier this year.
Investors are also closely watching upcoming US inflation data and a planned meeting between US President Donald Trump and Chinese President Xi Jinping later this week.
Market participants believe stronger-than-expected US inflation data could further reduce hopes of interest rate cuts, adding more pressure on gold prices in the coming days.
Read next: Gold price in Pakistan falls for second time in a week
