Gold and silver prices experienced a significant decline on Wednesday in both global and local markets after a one-day pause, as renewed fighting in the Middle East dampened hopes for a resolution to the US-Israeli conflict with Iran, raising concerns about inflation and potential interest rate hikes.
International Market Decline
In the international bullion market, spot gold dropped 2.1% to $4,172.44 per ounce, its lowest level since March 23. US gold futures for August delivery also fell 2.1% to $4,195.60.
Local Market Impact
Following international trends, gold and silver prices in Pakistan recorded a significant decline. According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold per tola dropped by Rs12,627 to settle at Rs442,436. Similarly, the price of 10 grams of gold decreased by Rs11,364 to Rs378,170. Silver prices also declined, with the per tola rate falling by Rs385 to Rs6,929, and the price of 10 grams of silver dropping by Rs352 to Rs5,893.
Geopolitical Tensions
Iran's Revolutionary Guards stated they had carried out missile and drone attacks on US military bases in Jordan, Kuwait, and Bahrain in retaliation for American strikes on Iranian targets around the Strait of Hormuz. These clashes mark one of the largest exchanges of hostilities since a ceasefire was agreed upon in April.
Bullion has fallen more than 20% since the US-backed war with Iran began in late February. The conflict has led to a surge in oil prices, stoking fears of inflation and higher interest rates. While gold is traditionally seen as a hedge against inflation, higher interest rates typically weigh on the non-yielding metal.
Market Outlook
Investors are now awaiting the May Consumer Price Index data later in the day and the Producer Price Index reading on Thursday to gauge the Federal Reserve's monetary policy stance, after a strong jobs report last week raised bets on further rate hikes. Spot silver fell 2.1% to $63.99 per ounce, platinum dropped 3.1% to $1,673.97, and palladium fell 0.4% to $1,217.
Previous Day's Gains Reversed
On Tuesday, gold and silver prices had risen in both global and local markets after a three-day pause. In the international market, gold per ounce increased by $28.29 to $4,326.27. Locally, gold per tola rose by Rs2,830 to Rs455,063, and 10 grams increased by Rs2,306 to Rs389,534. Silver per tola rose by Rs141 to Rs7,314, and 10 grams by Rs129 to Rs6,245.
Earlier Weekly Trends
On Monday, gold prices in Pakistan declined in line with subdued international trends. Gold per tola fell by Rs3,094 to Rs452,233, and 10 grams dropped by Rs2,785 to Rs386,987. On Saturday, international gold prices dropped by $124 per ounce, while locally, gold declined by Rs12,489 per tola and Rs11,240 per 10 grams. On Friday, international gold decreased by $14 per ounce to $4,453, and locally, gold per tola fell by Rs1,469 to Rs467,816, while 10 grams decreased by Rs1,323 to Rs401,012. International silver fell by 66 cents per ounce to $72.52, leading to local declines of Rs67 per tola to Rs7,730 and Rs61 per 10 grams to Rs6,623.
