Gold prices in Pakistan declined on Thursday, following losses in the international market as global factors weighed on the precious metal.
In the local market, the price of gold per tola fell by Rs2,900, bringing it down to Rs540,362. The price of 10 grams of gold also dropped by Rs2,486 and was recorded at Rs463,273, according to rates issued by the All Pakistan Gems and Jewellers Sarafa Association.
The decline came a day after a sharp increase in the domestic market. On Wednesday, the price of gold per tola had risen by Rs3,700 to settle at Rs543,262.
The drop in local prices largely reflected the trend in global markets where gold also moved lower. In the international market, the price of gold fell by $29 to reach $5,176 per ounce, which included a premium of $20.
Silver prices in Pakistan also followed the downward trend. The price of silver per tola decreased by Rs179 and reached Rs9,175.
Global market under pressure
Gold prices slipped in the international market as the US dollar strengthened and expectations for early interest rate cuts in the United States weakened.
Spot gold was down 0.2 percent at $5,167.15 per ounce as of 0718 GMT. US gold futures for April delivery also edged lower by 0.1 percent to $5,173.10.
A stronger US dollar tends to make gold more expensive for buyers who use other currencies, which can reduce demand.
Nicholas Frappell, global head of institutional markets at ABC Refinery, said the strength of the US dollar and interest rate outlook were creating pressure on gold prices despite ongoing global tensions that usually support demand for safe assets.
Concerns about inflation have also grown as oil prices surged following tensions in the Middle East. Iran warned that oil could reach $200 per barrel after attacks on merchant ships, while the International Energy Agency called for a large release of strategic oil reserves.
Oil prices have climbed above $100 per barrel, adding to worries about rising inflation.
Analysts say the changing outlook for US interest rates is another factor affecting gold. Goldman Sachs has delayed its expectations for US Federal Reserve rate cuts and now expects reductions in September and December.
Recent economic data also shaped market sentiment. The US consumer price index rose 0.3 percent in February, slightly faster than the 0.2 percent increase recorded in January. On a yearly basis, inflation stood at 2.4 percent.
Investors are now waiting for the release of the Personal Consumption Expenditures index, a key inflation indicator, which is expected on Friday.
Meanwhile, other precious metals saw small gains. Spot silver rose 0.3 percent to $86.06 per ounce, platinum increased 0.3 percent to $2,176.14, and palladium gained 0.9 percent to $1,651.11.
