An undated image of gold bars. — AFP/File

Gold prices extended losses on Saturday as the rate fell by 0.5% as investors remained concerned over news reports hinting towards a massive interest rate hike by the State Bank of Pakistan (SBP).

According to the data released by the All-Pakistan Sarafa Gems and Jewellers Association (APSGJA), the price of gold (24 carats) declined by Rs1,000 per tola and Rs858 per 10 grams to settle at Rs194,100 and Rs166,409, respectively

Investors expect the central bank to raise interest rates as early as this week in an off-cycle review as the South Asian nation faces pressure to mend its finances amid a $1 billion loan tranche it is seeking from the International Monetary Fund (IMF).

While gold is considered an inflation hedge but is highly sensitive to rising interest rates, which increase the opportunity cost of holding the non-yielding bullion.

Cumulatively, the precious commodity lost Rs1,900 per tola during the week ending February 25.

Meanwhile, silver prices in the domestic market fell by Rs20 per tola and Rs17.15 per 10 grams to settle at Rs2,080 per tola and Rs1,783.26 per 10 grams, respectively.

In the international market, the gold price slipped by $8 per ounce to settle at $1,810 — its lowest in eight weeks — pushed down by a stronger dollar and bond yields as the market braced for more interest rate hikes by the US Federal Reserve in the coming months.

Pressuring gold, the dollar index rose to a seven-week peak, while benchmark yields were also en route to their fifth weekly rise.

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