Gold prices in Pakistan fell on Monday as the precious metal also lost ground in the international market, with a stronger US dollar and profit-taking weighing on prices.
The price of gold dropped Rs2,700 per tola to Rs457,536, according to rates issued by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).
The price of 10-gramme gold also declined by Rs2,315 to Rs392,263.
Gold had closed at Rs460,236 per tola on Saturday after falling Rs100 during the session.
In the international market, gold slipped $27 to $4,350 per ounce. Spot gold was down 0.6 percent at $4,351.12 per ounce by 0903 GMT, while US gold futures fell 0.8 percent to $4,388.70.
The stronger dollar put pressure on gold as it made the dollar-priced metal more expensive for buyers using other currencies. Some investors also took profits after gold climbed to a one-week high of $4,399.41 on Friday.
Ricardo Evangelista, director and chief executive of ActivTrades, said the firmer dollar and profit-taking after Friday’s rebound were weighing on gold.
Oil prices also fell to their lowest level in more than a week on Monday as investors looked for possible diplomatic progress in the Iran war during this week’s UN meeting. Lower oil prices had helped gold rise on Friday by easing some concerns over prolonged inflation.
However, tensions remained high after Iran and the United States exchanged fresh threats on Sunday. US President Donald Trump warned Iran of severe economic consequences and possible action against its leadership if it did not reach a deal, while Iran’s military said it would respond harshly to any new attack.
Evangelista said gold could face pressure towards $4,000 if inflation remains persistent and central banks continue to tighten monetary policy. He added that a reduction in US-Iran tensions could lower inflation fears, weaken the dollar and help gold move towards $5,000.
The Bank of Japan joined other major central banks in tightening policy on Friday, following rate increases by the US Federal Reserve and the European Central Bank.
Traders are also pricing in an 88 percent chance of a US rate hike in December, according to the CME FedWatch Tool. Higher interest rates can reduce demand for gold because they make interest-bearing investments more attractive.
Meanwhile, silver remained unchanged at Rs7,100 per tola in Pakistan.
In global trading, spot silver slipped 0.1 percent to $66.14 per ounce, while platinum rose 0.2 percent to $1,803.57. Palladium was little changed at $1,303.23 per ounce.
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