Gold prices surged sharply in Pakistan on Monday, tracking a strong rally in global markets as investors reacted to easing concerns over higher US interest rates and a weaker dollar.
According to rates issued by the All Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold jumped by Rs10,800 per tola to reach Rs455,136. The rate for 10 grams of gold also climbed by Rs9,720, settling at Rs389,600.
The latest increase follows gains recorded over the weekend, when gold added Rs4,370 per tola and closed at Rs444,336.
The rise in local prices mirrored developments in international markets, where gold gained significant ground. The global rate increased by $108 to reach $4,327 per ounce, including a premium of $20.
Silver prices also moved higher in the domestic market. The price of one tola of silver rose by Rs230 to Rs7,509.
Globally, gold touched its highest level in nearly a week as investors welcomed news of a preliminary agreement between the United States and Iran aimed at ending their conflict and reopening the Strait of Hormuz.
The proposed deal helped push oil prices lower, reducing fears that energy costs could fuel inflation and force the US Federal Reserve to raise interest rates further. Lower interest rate expectations tend to support gold because the precious metal does not offer any yield.
Spot gold rose 2.7 percent to $4,334.48 an ounce during trading, while US gold futures for August delivery advanced 2.8 percent to $4,355.30.
Market sentiment was also supported by a decline in the US dollar, which slipped to a 10-day low. A weaker dollar makes gold cheaper for buyers using other currencies, often boosting demand.
Analysts said investors are reassessing the outlook for US monetary policy after the drop in oil prices. Giovanni Staunovo, an analyst at UBS, said markets are increasingly ruling out the possibility of interest rate hikes, a development that is helping lift gold prices
However, he noted that the market may move into a period of consolidation as investors await further guidance from the Federal Reserve later this week.
While the tentative US-Iran agreement has eased some immediate geopolitical concerns, traders remain focused on upcoming economic signals that could determine the next direction for gold prices.
Read next: Pakistan economy shows recovery signs as reserves, remittances rise
