Gold prices in Pakistan declined on Friday, tracking a sharp fall in the international market where bullion lost more than 2% after stronger-than-expected US employment data reinforced expectations that the Federal Reserve may keep interest rates elevated for longer, while inflation risks stemming from the Middle East conflict continued to cloud the outlook.

According to the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA), the price of gold per tola dropped by Rs1,469 to settle at Rs467,816. Likewise, the price of 10 grams of gold fell by Rs1,323 to Rs401,012.

The decline came a day after gold had gained Rs1,523 per tola to close at Rs469,285 in the domestic market.

Internationally, spot gold was down 2.4% at $4,365.93 per ounce by 1415 GMT, after touching its lowest level since March 26 during intraday trade. US gold futures for August delivery also fell 2.5% to $4,390.70 an ounce, according to Reuters.

Market participants attributed the weakness in bullion prices to a surprisingly strong US labour market report, which reduced expectations of near-term monetary easing by the Federal Reserve. Higher interest rates typically diminish the appeal of non-yielding assets such as gold.

Data released by the US Labour Department showed that nonfarm payrolls increased by 172,000 jobs in May, following an upwardly revised gain of 179,000 jobs in April. The reading significantly exceeded market expectations of 85,000 new jobs, indicating continued resilience in the world's largest economy despite geopolitical uncertainties.

The robust jobs report prompted investors to reassess the outlook for US monetary policy. Market pricing now suggests a 68% probability of a Federal Reserve rate hike by December, adding pressure on precious metals.

Despite the latest decline, analysts believe gold's broader outlook remains constructive due to persistent geopolitical tensions and inflation concerns linked to the ongoing conflict in the Middle East.

Adnan Agar, Director at Interactive Commodities, said gold was currently trading on the weaker side and appeared to be testing key support levels.

"It looks like the market is trying to break the $4,400 level. Prices may decline towards the $4,323 area, which is an important support zone," he said.

Meanwhile, silver prices in the local market also moved lower, falling by Rs67 to Rs7,730 per tola. Other precious metals, including platinum and palladium, were also heading for weekly declines in international markets.

Meanwhile, the Pakistani rupee appreciated marginally against the US dollar on Friday, closing at 278.41 in the inter-bank market, while the greenback remained supported globally by safe-haven demand amid Gulf tensions.