Gold Rates in Pakistan Slip as Middle East Tensions Revive Fed Rate Hike Bets

Gold rates in Pakistan edged lower this week, mirroring a pullback in the international bullion market, where a renewed flare-up in US-Iran tensions pushed oil prices higher and revived expectations of tighter US monetary policy.

In the global market, the gold rate ended a volatile week around $4,100 per ounce, giving back most of last week's 2 percent rally. Spot gold slid nearly 1 percent on Friday to about $4,071 per ounce, with US gold futures for August delivery settling near $4,113, leaving the metal down roughly 1.5 percent for the week.

What Drove the Decline?

The reversal came from an unexpected direction: geopolitics. US forces carried out strikes on targets in Iran over two days in response to attacks on vessels in the Strait of Hormuz, prompting retaliatory strikes by Tehran on US bases across the region. The escalation disrupted energy flows through Hormuz and sent crude oil surging about 5 percent for the week.

Ordinarily, geopolitical stress supports gold as a safe haven. This time, however, the inflationary impact of higher oil prices dominated. Traders now see roughly a 62–63 percent chance of a Federal Reserve rate hike in September, up sharply from under 50 percent a week earlier, according to the CME FedWatch tool. Minutes from the Fed's June meeting reinforced the hawkish tilt, showing several policymakers saw a case for raising rates amid mounting inflation concern. Since gold pays no yield, higher rate expectations increase the cost of holding it — which is why the metal fell even as tensions rose.

Some relief came late in the week when President Trump said Iran had reached out seeking a deal, and reports indicated the two sides would continue peace talks despite the hostilities, which helped gold steady above $4,100. Separately, HSBC lowered its average gold price forecast for 2026 to $4,560 from $4,864.

Impact on Gold Rates in Pakistan

The softer international trend was reflected in gold rates in Pakistan. According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the gold price per tola fell by Rs1,400 on Friday to Rs432,436, while 10-gram gold declined by Rs1,200 to Rs370,744. The drop erased Thursday's gain of Rs3,600 per tola and followed a sharper fall of Rs4,700 earlier in the week.

The 1 tola gold price in Pakistan for 24-karat gold is now hovering around Rs432,000–433,000, with 22-karat gold trading near Rs397,000 per tola. Silver moved the other way, rising to Rs6,432 per tola. Anyone tracking the live gold rate in Pakistan should note that local prices remain hostage to two forces: the international spot price and the USD/PKR exchange rate — even a flat global market can produce higher domestic rates if the rupee weakens.

Demand Picture

On the demand side, gold traded at a wide discount in India this week as price volatility kept buyers away, while demand in China held steady. Notably, China's central bank reported its largest monthly increase in gold reserves in over two and a half years in June — a reminder that official-sector buying continues to provide a longer-term floor under prices.

Outlook

Analysts expect gold prices in Pakistan to remain range-bound with a slight upward bias over the coming month, trading between roughly Rs425,000 and Rs440,000 per tola. The near-term direction hinges on next week's US inflation data and Fed Chairman Kevin Warsh's testimony, along with developments in the US-Iran talks. For local buyers, checking the live gold rate in Pakistan before any purchase remains essential — daily swings of several thousand rupees per tola were the norm again this week.

Note: Rates mentioned are indicative and may vary slightly across cities and jewellers. Always confirm the latest gold rate with your local Sarafa market before buying or selling.