Gold prices in Pakistan experienced a significant downturn on Monday, mirroring a steep decline observed in global markets where the precious metal reached its lowest level in nearly four months. This sharp fall has sent ripples through the local market, affecting investors and consumers alike. The price per tola of gold in Pakistan decreased by Rs8,100, settling at Rs491,362, while the rate for 10 grams dropped by Rs6,945 to Rs421,263, marking a notable contraction in value within a single trading session.
On the international front, spot gold prices tumbled as much as 6.3 percent to $4,203.21 per ounce, after earlier plunging over 8 percent during the session. This marked the lowest point since November 24, extending gold’s losing streak to a ninth consecutive session. The metal’s recent performance reflects a broader trend of sustained pressure, following its most substantial weekly loss in approximately 43 years last week, where it shed more than 10 percent of its value. Compared to its record peak of $5,594.82 per ounce reached in January, gold has now declined by roughly 25 percent.
Experts attribute this downturn to a combination of rising inflation concerns and the ongoing geopolitical instability in the Middle East, which have collectively shifted market expectations regarding global monetary policy. Tim Waterer, chief market analyst at KCM Trade, highlighted that the conflict involving Iran, now entering its fourth week, alongside oil prices hovering around the $100 mark, has altered investor sentiment. Instead of anticipating rate cuts, markets are now bracing for potential interest rate hikes, which tend to diminish gold’s attractiveness as an investment.
The escalation of tensions in the Gulf region has been particularly impactful. Iran’s recent warnings about targeting energy and water infrastructure in neighboring Gulf countries, especially if former US President Donald Trump follows through on threats to strike Iran’s power grid, have added layers of uncertainty. This geopolitical unrest has contributed to sustained high oil prices, with crude oil remaining above $110 per barrel. Such elevated energy costs exacerbate inflationary pressures globally, increasing the likelihood that central banks, including the US Federal Reserve, will adopt tighter monetary policies.
While gold traditionally serves as a hedge against inflation, the prospect of rising interest rates reduces its appeal since it does not yield any interest or dividends. Consequently, investors are recalibrating their portfolios, factoring in the possibility that the Federal Reserve may raise rates rather than cut them before the end of 2026. This shift in monetary policy expectations has played a crucial role in the recent slump in gold prices.
Other precious metals have also faced downward pressure amid this volatile environment. In Pakistan, silver prices declined by Rs50 per tola, reaching Rs7,684, while the 10-gram rate fell by Rs43 to Rs6,587. Globally, spot silver dropped by 6.1 percent, platinum prices slipped 6.4 percent, and palladium decreased by 3.6 percent. These declines reflect broader market trends influenced by a stronger US dollar and tightening financial conditions worldwide.
Market analysts warn that the combination of ongoing geopolitical tensions, persistent inflation concerns, and a robust dollar could continue to weigh heavily on gold and other precious metals in the near term. Investors are advised to remain cautious as these factors contribute to heightened volatility and uncertainty in global commodity markets.
