Gold price drops by Rs200 per tola in Pakistan

• Gold drops by Rs200 to settle at Rs126,800 per tola.
• Price declines by Rs172 to close at Rs108,710 per 10 grams.
• Silver prices in the domestic market remain unchanged.

KARACHI: In line with the trend in global markets, gold prices in Pakistan recorded meagre losses on Tuesday.

Gold was down by Rs200 at Rs126,800 per tola and decreased by Rs172 to Rs108,710 per 10 grams.

The rates of gold were Rs127,000 per tola and Rs108,882 per 10 grams on Monday.

It is pertinent to mention that the gold rates in Pakistan are around Rs3,500 below the cost compared to the gold rate in the Dubai market.

Meanwhile, silver prices in the domestic market remained unchanged at Rs1,460 per tola and Rs1,251.71 per 10 grams.

Gold eases in international market

In the international market, gold retreated below the $1,900 mark as equities pared losses despite an escalation in the Ukraine crisis that pushed safe-haven bullion to its highest in almost nine months in early trade.

Spot gold fell 0.6% to $1,895.02 an ounce, having hit its highest since June 1 at $1,913.89. US gold futures fell 0.3% to $1,894.70.

Global markets clawed back losses as investors clung to hopes that Moscow's deployment of troops to two breakaway regions in eastern Ukraine will be as far Russia goes.

"There was a lot of pessimism leading into the European open," said Michael Hewson at CMC Markets UK, adding that the partial rebound in equities took some attraction out of gold.

However, Hewson also said that gold could strengthen if central banks slow their tightening cycle in response to the geopolitical backdrop.

The United States and its European allies are set to announce fresh sanctions against Russia after President Vladimir Putin recognised two breakaway regions in eastern Ukraine. 

"We're seeing some profit-taking in gold also because there is obviously at this point quite an elevated risk premium baked into the price of gold," said Saxo Bank analyst Ole Hansen.

Gold is considered a hedge against inflation and geopolitical risks.

"If the Ukraine crisis escalates further, we believe that gold will remain in demand," Commerzbank analysts said in a note.

— With additional input from Reuters