Gold prices in Pakistan dropped significantly because tensions in the Middle East eased and the Federal Reserve indicated it might keep interest rates higher for a longer time. This caused the value of 24-karat gold to fall by Rs7,800 to Rs240,900 per tola. Just the day before, gold had already lost Rs3,500 per tola. These changes followed a large drop in international gold prices on Monday, the biggest in almost two years.
The Karachi Sarafa Association reported that the price of 24-karat gold fell to Rs206,533 per 10 grams, down by Rs6,687 compared to the previous day. Similarly, the price of 22-karat gold decreased to Rs189,322 per 10 grams. Additionally, silver prices dropped in the domestic market, with 24-karat silver being sold at Rs2,650 per tola and Rs2,271.94 per 10 grams, marking a loss of Rs100 per tola and Rs85.74 per 10 grams.
Richard Grace, a senior currency analyst and international economist at ITC Markets, mentioned that the easing tensions in the Middle East led to some profit-taking and tactical short-selling in gold prices. Despite this, globally, spot gold is still up by approximately 16% since mid-February, supported by geopolitical risks, central bank buying, and demand from Chinese consumers. This rise occurred despite the strengthening of the dollar and Treasury yields, as signs emerged that the Federal Reserve might delay its expected shift in policy.
Market attention is now focused on upcoming US economic data, including the Fed’s preferred measure of inflation, which could provide insights into future monetary policy decisions. Recent strong inflation reports have led policymakers to adopt a more hawkish stance on interest rates. Consequently, expectations for monetary easing this year have decreased, potentially creating a challenging environment for gold, as it typically struggles in a higher-for-longer rate scenario due to its lack of interest payments.
At 12:55 am PST, spot gold dropped by 0.87% to $2,307 per ounce. Silver also declined following a significant fall in the previous session, while palladium and platinum prices also experienced drops.
