The State Bank of Pakistan (SBP) raised over Rs512 billion through the auction of Pakistan Investment Bonds (PIBs), reflecting strong participation from banks amid increased interest rates.

According to the auction result released on Tuesday, the central bank received total bids worth Rs906.4 billion across multiple tenors, against which it accepted Rs499.4 billion in face value. Including accrued interest, the total realised amount stood at Rs512.5 billion.

The auction featured a mix of short-, medium-, and long-term instruments, including two-year zero-coupon, three-year, five-year, 10-year, and 15-year zero-coupon PIBs. The bulk of participation was concentrated in the five-year and 10-year tenors, highlighting investor preference for medium- to long-duration instruments amid uncertainty over the monetary policy trajectory.

The five-year PIB attracted the highest participation, with bids exceeding Rs425 billion, although only a limited portion was accepted. Similarly, strong interest was observed in the 10-year tenor, where bids crossed Rs162 billion, indicating continued appetite for locking in yields over a longer horizon.

In contrast, relatively lower participation was seen in the shorter two-year and three-year papers, suggesting that market participants were positioning for potential shifts in the interest rate cycle rather than focusing on near-term maturities.

The auction comes a day after the SBP raised the policy rate by 100 basis points to 11.5%, citing inflationary risks stemming from global commodity market volatility and geopolitical tensions. The PIB auction results suggest that market participants are recalibrating expectations in light of the tightening stance, with demand tilting towards longer tenors to secure attractive yields.

Furthermore, the Pakistani rupee appreciated marginally against the US dollar in the inter-bank market on Tuesday, closing at 278.81, up Rs0.01 from Monday’s close at 278.82.

Meanwhile, gold prices in Pakistan fell sharply, mirroring losses in the international market, where bullion dropped more than 2% to a near four-week low amid persistent inflationary concerns and geopolitical uncertainty.

In the local market, the price of gold per tola declined by Rs8,900 to settle at Rs485,062. Similarly, 10-gram gold fell by Rs7,630 to Rs415,862, according to rates issued by the All-Pakistan Gems and Jewellers Sarafa Association. A day earlier, gold per tola had closed at Rs493,962 after gaining Rs800.

Silver prices also moved lower, shedding Rs238 to Rs7,811 per tola, although the level remains historically elevated.

In the international market, spot gold dropped 2.4% to $4,570.34 per ounce by midday trading, marking its lowest level since early April. US gold futures for June delivery dipped 2.3% to $4,584.70, reflecting cautious investor sentiment ahead of the US Fed’s monetary policy announcement.

Analysts attributed the decline to a stronger dollar and rising inflationary concerns, compounded by geopolitical tensions. US President Donald Trump’s dissatisfaction with Iran’s latest proposal to end hostilities dampened hopes for a near-term ceasefire, adding to market volatility.