Gold Market Retreat
Gold prices fall sharply in Pakistan following stronger-than-expected U.S. inflation data.
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Key Points
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U.S. headline consumer prices rose 0.4% month over month in August, up from 0.1% in July, while core CPI increased 0.3%, its fastest pace in four months. Markets consequently raised the implied probability of a Federal Reserve rate increase to about 86%–89%, from roughly 59%–67% a week earlier.
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The stronger dollar added to the pressure on bullion: the U.S. Dollar Index was near 99.57, its highest level since September 3, while a stronger dollar makes gold more expensive for buyers using other currencies.
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The latest Pakistani rates included a 24-karat gold price of Rs388,662 per 10 grams and a 22-karat rate of Rs356,286 per 10 grams. Silver fell to Rs5,831 per 10 grams locally, while international silver declined to $63.23 per ounce.
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Gold has remained substantially above its level a year earlier despite the recent retreat—roughly 17% to 20% higher—after reaching nearly $5,600 per ounce in late January and falling to about $3,975–$4,000 in June.
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International oil prices were also supported by specific supply and infrastructure disruptions: WTI was near $99 a barrel and had risen more than 15% during the month, while Saudi Arabia shut its East-West pipeline after a drone attack and postponed talks on a temporary Strait of Hormuz shipping framework.
Gold prices fell sharply in Pakistan on Monday as stronger-than-expected U.S. inflation data heightened expectations for a Federal Reserve rate increase this week. According to All Pakistan Sarafa Gems and Jewellers Association, 24-karat gold dropped Rs3,800 per tola to Rs453,336, while international gold declined roughly $38 to about $4,308 per ounce. Higher yields and a stronger dollar reduced gold's appeal, since the metal generates no interest income.
U.S. Inflation Data Triggers Rate-Hike Expectations
U.S. headline consumer prices rose 0.4% month over month in August, up sharply from just 0.1% in July. Core CPI increased 0.3%, marking its fastest pace in four months. Markets immediately adjusted: the implied probability of a Federal Reserve rate increase jumped to 86%–89%, from roughly 59%–67% just one week earlier.
Stronger Dollar Deepens Gold's Losses
The U.S. Dollar Index surged near 99.57, its highest level since September 3. A stronger dollar makes gold more expensive for buyers using other currencies, adding pressure to bullion prices globally. This currency headwind combined with rising interest-rate expectations to drive the multiweek retreat in gold values.
Pakistan's Metal Prices Decline Across the Board
Silver fell even more steeply than gold in Pakistan's market, dropping Rs122 per tola to Rs6,802. The 24-karat gold price reached Rs388,662 per 10 grams, while 22-karat gold settled at Rs356,286 per 10 grams. Internationally, silver declined to $63.23 per ounce as investors fled precious metals in favor of higher-yielding assets.
Gold Still Up Sharply Despite Recent Pullback
Despite Monday's decline, gold remains substantially above year-ago levels—roughly 17% to 20% higher. The metal peaked near $5,600 per ounce in late January before falling to approximately $3,975–$4,000 in June. Analysts noted that geopolitical uncertainty and persistent safe-haven demand could still attract buyers at lower prices, especially as Middle East tensions add to inflation concerns.
Oil Prices Climb on Supply Disruptions
International oil prices strengthened alongside inflation worries. WTI crude neared $99 a barrel and had risen more than 15% during the month. Saudi Arabia shut its East-West pipeline after a drone attack and postponed talks on a temporary Strait of Hormuz shipping framework, tightening global crude supply and adding to inflationary pressure.
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