State Bank of Pakistan Injects Massive Liquidity into Banking System
The State Bank of Pakistan (SBP) has executed a significant liquidity injection, deploying over Rs1.57 trillion into the banking system through a combination of conventional open market operations and Shariah-compliant Mudarabah-based operations. This substantial move aims to stabilize and support the financial sector amid evolving economic conditions.
Details of the Open Market Operations
On February 20, 2026, the central bank conducted reverse repo purchase auctions for both 7-day and 14-day tenors. Against total bids amounting to Rs1.60 trillion, the SBP accepted Rs1.39 trillion in face value, which translates to a realised value of Rs1.36 trillion. The majority of this liquidity, specifically Rs1.30 trillion, was injected under the 14-day tenor at a cut-off rate of 10.51% per annum. Meanwhile, Rs93.1 billion was allocated for the 7-day tenor at a slightly higher rate of 10.53%.
Shariah-Compliant Operations
In parallel, the SBP also facilitated Shariah-compliant Mudarabah-based open market operation injections. The central bank accepted the entire offered amount of Rs210.5 billion across both tenors, with a cut-off rate set at 10.54%. This dual approach underscores the SBP's commitment to catering to diverse banking needs while maintaining financial stability.
Gold Prices Continue Upward Trajectory
Simultaneously, gold prices in Pakistan have maintained their upward momentum, reflecting gains in the international market. The surge is attributed to weaker-than-expected US economic growth data and escalating geopolitical tensions between the United States and Iran, which have bolstered safe-haven demand for the precious metal.
Local Market Performance
In the domestic market, the price of 24-karat gold per tola increased by Rs2,500, reaching Rs526,462, according to the latest rates issued by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA). The price for 10 grams also rose by Rs2,144, settling at Rs451,356. This increase follows a sharp jump of Rs7,900 per tola recorded on Thursday, when gold closed at Rs523,962. Silver prices also experienced gains, climbing by Rs170 to Rs8,574 per tola.
International Market Trends
On the global stage, spot gold rose by 0.8% to $5,039.42 per ounce by 1404 GMT, while US gold futures for April delivery advanced by 1.3% to $5,060.10. These movements occurred amid mixed macroeconomic signals from the United States. Recent data indicated a sharp slowdown in US GDP growth during the fourth quarter, while the Federal Reserve's preferred inflation gauge, the PCE index, exceeded expectations, adding uncertainty to the interest-rate outlook.
Geopolitical Factors and Market Analysis
Market participants remain focused on geopolitical risks, particularly after US President Donald Trump issued a 10-day ultimatum to Iran, raising concerns about potential escalation in the Middle East. Adnan Agar, Director at Interactive Commodities, noted that gold trading has been range-bound, with prices fluctuating between $5,049.95 and $5,070 per ounce. "The market is a bit slow today and currently near its session high. Let's see what happens over the weekend," he commented.
Agar further explained that the broader near-term outlook for gold remains slightly negative due to macroeconomic factors. However, he warned that any deterioration in US-Iran relations could swiftly drive prices higher. Analysts highlight that bullion continues to attract support from safe-haven flows and expectations that central-bank gold purchases, which have recently slowed, may resume in response to persistent geopolitical risks.
