Gold prices in Pakistan witnessed a dramatic decline on Wednesday, falling by more than Rs12,000 per tola after renewed military tensions between the United States and Iran triggered sharp movements in international financial markets. The decline follows fresh US strikes on Iranian targets, which have intensified geopolitical uncertainty and altered investor sentiment across global commodity markets.
According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of 24-karat gold per tola dropped by Rs12,100, bringing the new rate down to Rs363,000. Similarly, the price of 10 grams of 24-karat gold fell by Rs 10,374 to settle at Rs 311,214.
The sharp correction comes after gold prices had recently touched record highs, driven by safe-haven demand amid escalating conflicts in the Middle East.
International Gold Prices Record Sharp Decline
The decline in Pakistan’s gold market mirrored a significant drop in international bullion prices. In the global market, spot gold fell by approximately 2.1%, reaching $4,172.44 per ounce. US gold futures for August delivery also declined by 2.1%, reflecting growing concerns among investors regarding inflationary pressures and potential monetary tightening.
Market analysts noted that while geopolitical tensions typically support gold prices, the latest developments have increased fears of higher oil prices and persistent inflation. As a result, investors are expecting central banks, particularly the US Federal Reserve, to maintain higher interest rates for a longer period, reducing the appeal of non-yielding assets such as gold.
Why Are Gold Prices Falling Despite Rising Geopolitical Tensions?
Traditionally, gold is considered a safe-haven asset during periods of geopolitical instability. However, financial experts explain that the current market environment is being influenced by multiple factors simultaneously.
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The renewed US-Iran conflict has pushed energy prices higher, raising concerns about inflation. Investors now anticipate that central banks may delay interest rate cuts or even adopt a more hawkish stance. Higher interest rates generally strengthen the US dollar and increase bond yields, making gold less attractive to investors.
Silver Prices Also Witness Significant Losses
The downward trend was not limited to gold. Silver prices also experienced notable declines in both local and international markets.
In Pakistan, the price of silver per tola decreased substantially, reflecting weaker global demand and broader pressure on precious metals. International silver markets followed a similar trajectory as investors reassessed their positions amid changing economic expectations.
Analysts believe precious metals may remain volatile in the coming days as markets continue to react to developments in the Middle East and upcoming economic data from major economies.
Impact on Pakistani Investors and Jewelers
The sudden drop in gold prices has created mixed reactions among investors and jewelry traders. While existing investors may face short-term losses due to the decline in market value, prospective buyers could view the correction as an opportunity to enter the market at relatively lower prices.
Jewelry retailers expect increased consumer interest if prices remain at current levels, particularly ahead of the upcoming wedding season. However, traders remain cautious as further geopolitical developments could trigger additional volatility.
Market Outlook: What Happens Next?
Financial experts suggest that gold prices may continue to fluctuate in the short term as investors closely monitor the evolving US-Iran situation, global inflation trends, and central bank policies.
If geopolitical tensions intensify further, safe-haven demand could return and support gold prices. On the other hand, stronger economic data and expectations of prolonged high interest rates could keep downward pressure on bullion markets.
Conclusion
The Pakistani gold market experienced one of its sharpest single-day declines in recent months, with prices falling by over Rs12,000 per tola following fresh US-Iran strikes and a corresponding drop in international bullion markets. While the correction offers buying opportunities, ongoing global economic uncertainty and rising tensions in the Middle East will likely keep gold prices volatile in the near term.
