Pakistan’s forex reserves held by the State Bank of Pakistan (SBP) fell sharply during the week ending July 10, 2026, as the country met external debt repayment obligations. Despite the decline in reserves, the Pakistani rupee strengthened to its highest level in 19 months, while domestic gold prices continued to rise even as international bullion prices dropped amid growing geopolitical tensions and expectations of higher US interest rates.

According to the SBP, its foreign exchange reserves decreased by $1.245 billion over the week, bringing total holdings to $17.2258 billion. The central bank attributed the decline primarily to external debt repayments.

Pakistan’s total liquid foreign currency reserves stood at $22.6755 billion. Of this amount, the SBP held $17.2258 billion, while commercial banks accounted for $5.4497 billion. The figures indicate that Pakistan continues to meet its external financial obligations while maintaining overall reserve stability.

Meanwhile, the Pakistani rupee extended its recent rally against the US dollar. The local currency closed at Rs277.97 per dollar on Thursday, gaining Rs0.03 from the previous session and moving below the Rs278 mark for the first time in nearly 19 months.

Internationally, the US dollar remained close to a one-month low after softer-than-expected inflation data strengthened expectations that the US Federal Reserve could delay further interest rate increases. The US Dollar Index stood at 100.47.

In Pakistan’s bullion market, gold prices rose despite a sharp decline in international markets. The All-Pakistan Gems and Jewellers Sarafa Association reported that the price of gold increased by Rs400 per tola to Rs425,436, while the price of 10 grams climbed Rs343 to Rs364,742.

Global gold prices, however, came under pressure. Spot gold dropped 1.7% to $3,989.66 per ounce, after briefly falling nearly 2% to its lowest level in more than two weeks. US gold futures also declined 1.4% to $3,994.10.

Analysts attributed the sell-off to rising oil prices and higher US Treasury yields, which increased inflation concerns and reinforced expectations that US interest rates could remain elevated for longer. Market participants currently see a 55% probability of a US rate hike in September.

Oil prices gained more than 1% as concerns grew over potential supply disruptions in the Middle East. Reports that Iran had asked Yemen’s Houthis to prepare to close the Red Sea oil route in the event of a US strike on Iranian infrastructure added fresh uncertainty to global energy markets.

Higher oil prices typically fuel inflation and reduce investor demand for non-yielding assets such as gold. At the same time, stronger Treasury yields and a firmer US dollar continued to weigh on international bullion prices.

In the domestic market, silver prices moved lower, with the price per tola falling by Rs134 to Rs6,155. Investors remain focused on geopolitical developments, energy market risks and future monetary policy decisions by major central banks.