Gold prices in Pakistan fell sharply on Wednesday, following a decline in the international market as a stronger US dollar and rising concerns over inflation weighed on demand for the precious metal.
The price of gold fell by Rs11,300 per tola to Rs454,036, according to rates released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).
The price of 10-gram gold also dropped by Rs9,688 to Rs389,262.
A day earlier, gold had closed at Rs465,336 per tola after losing Rs800.
The latest drop means gold has now fallen by more than Rs11,000 per tola in a single day, giving some relief to buyers after prices had climbed to high levels.
Gold prices fall in global market
Gold also came under pressure in international markets on Wednesday, hitting its lowest level since August 7.
Spot gold was down 0.1 percent at $4,323.59 per ounce by 0826 GMT after touching a more than three-week low earlier in the session. US gold futures for December delivery fell 0.6 percent to $4,370.40.
The international rate used for Pakistan’s local market was reported at $4,315 per ounce, including a $20 premium.
A stronger US dollar was one of the main reasons behind the decline. The dollar climbed to a two-week high as investors sought safety amid growing concerns over the economic impact of higher energy prices.
When the dollar strengthens, gold becomes more expensive for buyers using other currencies, which can reduce demand.
Middle East tensions add to inflation worries
Fresh tensions between the US and Iran have also pushed oil prices higher, raising concerns that inflation could remain high for longer.
That has added pressure on gold because investors are now watching the US Federal Reserve’s next move on interest rates.
Federal Reserve Governor Michael Barr said the central bank may need to raise rates if inflation does not cool quickly. Markets are now pricing in a 68 percent chance of a rate hike at the Fed’s meeting this month, according to the CME FedWatch Tool.
Higher interest rates usually weigh on gold because the metal does not pay interest or dividends. As returns on interest-bearing assets improve, investors may have less reason to hold gold.
Markets are also waiting for key US jobs data this week. The ADP employment report is due on Wednesday, while the closely watched nonfarm payrolls report is scheduled for Friday.
Silver prices also declined in Pakistan on Wednesday.
The price of silver fell by Rs270 per tola to Rs6,859.
In the international market, spot silver slipped 0.3 percent to $64.04 an ounce. Platinum fell 0.6 percent to $1,729.83, while palladium dropped 0.5 percent to $1,304.50.
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