Gold drops sharply on global selloff

Precious metal falls Rs15,500 per tola amid stronger dollar, rising bond yields

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Gold drops sharply on global selloff

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KARACHI:

Gold prices in Pakistan declined sharply on Friday, tracking a broad-based selloff in international markets, where bullion fell to a more than one-week low amid a stronger US dollar and rising Treasury yields.

In the local market, the gold price per tola dropped to Rs476,862 after a steep decline of Rs15,500 during the day. Similarly, the price of 10-gram gold fell to Rs408,832, reflecting a loss of Rs13,289, according to rates issued by the All-Pakistan Gems and Jewellers Sarafa Association.

On the previous trading day, gold had closed at Rs492,362 per tola after gaining Rs1,000, highlighting heightened volatility in domestic bullion rates in line with global price swings.

Internationally, spot gold fell 2.3% to $4,541.91 per ounce by 11:40 am EDT (1540 GMT), after touching its lowest level since May 4 earlier in the session. The metal was down 3.7% for the week, according to Reuters, as investors reacted to stronger US Treasury yields and renewed dollar strength, both of which reduce the appeal of non-yielding assets such as gold.

Market sentiment was also influenced by persistent inflationary concerns linked to geopolitical tensions in the Middle East, which have increased expectations that global interest rates may remain elevated for longer than previously anticipated.

Silver prices in Pakistan also moved lower, declining by Rs972 to settle at Rs8,232 per tola, mirroring the downward trend in precious metals.

According to commodities' analyst Adnan Agar, Director at Interactive Commodities, gold markets have come under sustained pressure after hitting a recent high near $4,665, with intraday lows around $4,512 and trading later near $4,555.

He noted that the market was facing selling pressure amid weak geopolitical outcomes, particularly following inconclusive discussions involving the US, Iran, and China.

Agar added that additional pressure came from India's decision to double import duties on gold and silver, which dampened regional demand sentiment. However, he suggested that downside risks may be limited, identifying strong technical support levels near $4,400, with deeper support around $4,200.

Overall, analysts expect gold markets to remain volatile in the near term, driven by fluctuations in US monetary policy expectations, currency strength, and evolving geopolitical developments, all of which continue to shape investor appetite for safe-haven assets.

Meanwhile, the Pakistani rupee recorded a slight appreciation against the US dollar in the interbank market on Friday. The local currency closed at Rs278.61, gaining Rs0.01 from the previous day. On Thursday, it had settled at Rs278.62.

Meanwhile, the US dollar strengthened, riding on higher US Treasury yields, and heading for its largest weekly gain in over two months. Rising inflationary concerns driven by higher energy prices have increased expectations of a Federal Reserve rate hike later this year.