KARACHI:
Gold prices in Pakistan fell sharply on Monday, tracking a steep decline in the international market, as rising US Treasury yields weighed on demand for the non-yielding precious metal.
The price of gold declined by Rs12,800 per tola to Rs438,136, according to rates released by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA). The price of 10-gram gold decreased by Rs10,973 to Rs375,631.
Gold had closed at Rs450,936 per tola on Saturday after declining Rs2,100 during the session. The latest decline came as international gold prices fell sharply amid a rise in US Treasury yields and renewed uncertainty surrounding the outlook for US rates. Spot gold dropped as much as 4% on Monday to $4,111 an ounce, its lowest level since August 5, before recovering some of its losses, as per Reuters. The benchmark 10-year US Treasury yield climbed to its highest level since June 2007.
Higher bond yields can weigh on gold because the precious metal does not offer regular income, making it relatively less attractive when yields on assets rise. Adnan Agar, Director at Interactive Commodities, said gold had fallen to a low of $4,111, while the market was trading around $4,130 after opening near $4,250. The day’s high was around $4,285. He attributed the immediate pressure on gold to rising yields on 10-year US Treasury bonds.
Agar said the latest decline could represent another downward leg in the market, but suggested that gold could find some support around $4,000 to $4,050 in the coming days and potentially stage a rebound from those levels.
He also said developments surrounding US-Iran tensions could have a significant impact on gold prices. According to Agar, even a short-term ceasefire between Iran and the United States could prove positive for gold by supporting demand for the precious metal.
Meanwhile, silver prices also declined in the domestic market. The price of silver fell Rs325 per tola to Rs6,578. The sharp movement in international gold prices is expected to remain an important factor for the domestic market, along with movements in the rupee-dollar exchange rate and global geopolitical developments. Local gold prices generally track international bullion rates, with changes also affected by currency movements and domestic market conditions. Meanwhile, the Pakistani rupee extended its marginal gains against the US dollar in the inter-bank market on Monday, closing at 277.15, up Rs0.01. The rupee had closed at 277.16 on Friday, gaining Rs0.09 during the previous week.