Gold prices in Pakistan started the week lower on Monday, with the local market tracking a sharp decline in international bullion prices.
The price of gold fell Rs3,800 per tola to Rs453,336, according to rates released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).
The price of 10-gram gold also dropped by Rs3,258 to Rs388,662.
The decline came after gold prices fell in the international market, where investors turned cautious ahead of key interest rate decisions by major central banks.
On Saturday, the last trading day, gold had gained Rs400 to close at Rs457,136 per tola.
The international price of gold fell $38 to $4,308 per ounce on Monday.
Why global gold prices are falling
Gold came under pressure as fresh US inflation data strengthened expectations that the Federal Reserve could raise interest rates this week.
Spot gold was down 0.9 percent at $4,308.24 per ounce by 0907 GMT, extending its decline after recording a third straight weekly fall on Friday. US gold futures were down 1.4 percent at $4,348.50.
The US dollar also strengthened to its highest level in more than a week. A stronger dollar makes gold more expensive for buyers using other currencies.
Markets are now pricing in an 89 percent chance of a Fed rate hike at this week’s meeting, up from around 67 percent before last week’s inflation figures, according to the CME FedWatch Tool.
US consumer prices accelerated in August, while a key measure of underlying inflation recorded its biggest increase in four months. The data raised concerns that inflation may remain stubborn and prompted investors to expect a tighter monetary policy.
Gold usually benefits from inflation concerns because investors use it as a store of value. However, higher interest rates can reduce its appeal because gold does not pay interest.
Oil prices have also added to inflation concerns. Crude prices rose around 3 percent on Monday after fresh attacks involving Saudi energy infrastructure and ships in the Gulf raised fears of further disruption to global supplies.
Meanwhile, silver prices in Pakistan fell Rs122 to Rs6,802 per tola.
In international markets, spot silver declined 1.9 percent to $63.22 an ounce. Platinum fell 1.4 percent to $1,770.82, while palladium dropped 1.4 percent to $1,280.97.
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