Gold prices in Pakistan declined on Monday, mirroring sharp losses in the international market, where the yellow metal fell nearly 3%. The drop came after US President Donald Trump announced the reinstatement of a naval blockade on Iran, which boosted oil markets, reignited inflation concerns, and raised expectations of higher-for-longer US rates.

In the local market, the price of gold per tola stood at Rs429,736 after a significant decline of Rs3,800, according to the All-Pakistan Gems and Jewellers Sarafa Association. Similarly, the 10-gram gold was sold at Rs368,429, reflecting a drop of Rs3,258.

The price correction reflected the global investor sentiment shifting away from gold as a safe-haven asset.

Internationally, spot gold was down 2.8% to $4,005.59 per ounce by 10:38 am EDT (1438 GMT), marking its lowest level since July 1. Prices fell for the second straight session. US gold futures declined 2.4% to $4,013.40 per ounce. Silver prices followed suit, dropping more than 3%, with the local price per tola decreasing Rs123 to Rs6,339.

Interactive Commodities Director Adnan Agar attributed the decline to escalating geopolitical tensions. “Gold was standing at $4,000, with a high of $4,121; the market was holding at the lower end,” he said. “There is a possibility that prices will remain down. Pressure will persist because the US-Iran issue has escalated again, and there is a possibility that the conflict or even war could resume between them. Plus, the Strait of Hormuz is facing a blockade again, from both the US and Iran.”

Agar noted that rising oil prices, potentially reaching $84 to $85 per barrel in the coming days, could exert further negative pressure on gold. “The chances look downwards, and the market could come down to $3,600 or $3,700. If crude oil goes to $84-85, meaning if it goes up to $88 moving forward, then that will keep a bit of negative pressure on gold prices,” he added.

The Pakistani rupee appreciated 0.01% against the US dollar in the inter-bank market on Monday, closing at Rs278.02, up Rs0.03 from Friday’s close at Rs278.05.