Gold drops despite global rebound

Gold prices in Pakistan fell for a second consecutive session on Tuesday, with the local market reflecting the impact of a sharp decline in international bullion prices a day earlier. The price of 24-karat gold fell by Rs800 per tola to Rs437,336, according to rates released by the All-Pakistan Gems and Jewellers Sarafa Association. The price of 10-gram gold declined by Rs686 to Rs374,945. On Monday, gold had suffered a much sharper decline of Rs12,800 per tola, closing at Rs438,136, as international bullion prices plunged amid rising US Treasury yields and expectations of tighter monetary policy by the Federal Reserve. Tuesday's decline in Pakistan came despite a recovery in international gold prices. Spot gold rose around 1% to $4,155.73 per ounce, rebounding from a more than seven-week low of $4,110.55 recorded in the previous session. US gold futures gained 0.5% to $4,189.60. However, gold remained below its 100-day moving average, while a stronger US dollar and elevated Treasury yields continued to weigh on the non-yielding asset. The 10-year US Treasury yield also remained at elevated levels, adding to pressure on bullion. Adnan Agar, Director at Interactive Commodities, said the international gold market remained in a "danger zone" after its recent decline. He said gold traded between the low of $4,117 and the high of $4,175 on Tuesday and was around $4,147 during the session. According to Agar, the market could test the $4,050-$4,000 range if selling pressure persists. He added that a move above $4,280 could indicate that the market had established a low. Agar said upcoming US economic data would be crucial for determining the next direction of bullion prices. Markets are particularly focused on US inflation data due on Wednesday and the monthly employment report scheduled for Friday. The data could influence expectations for the Federal Reserve's rate path. According to market pricing cited by Reuters, investors were assigning around a 68% probability to a 25-basis-point Fed rate hike in October. Higher rates and Treasury yields generally increase the opportunity cost of holding gold, while a stronger dollar can make bullion more expensive for holders of other currencies. Meanwhile, silver prices in Pakistan also declined on Tuesday, falling Rs20 per tola to Rs6,558. In the inter-bank market, the Pakistani rupee gained Rs0.03 against the US dollar, closing at 277.12 compared with 277.15 in the previous session.