Pakistan’s gold market remains mired in instability, with traders and analysts seeing little chance of sustained calm in the near future. The sector has experienced sharp price swings amid an overall rising trend, fueled by a unique blend of global and domestic pressures.
Market observers attribute the volatility to a complex web of factors: international price fluctuations, geopolitical tensions, US tariff policies under President Trump, global currency shifts, and abrupt domestic policy decisions. These influences—combined with Pakistan’s largely informal and self-regulated gold trade—have created an environment where price movements are often guided more by intuition than by data-driven analysis.
Despite gold’s cultural and economic importance, Pakistan lacks comprehensive data on the sector. Neither the State Bank of Pakistan (SBP), the Ministry of Finance, the Ministry of Commerce, nor the Pakistan Bureau of Statistics maintains consolidated figures on the market’s size, supply, demand, or price trends. Instead, gold prices for different categories are announced daily by merchant associations—usually reflecting sentiment rather than market fundamentals.
The result is an opaque system where speculation reigns. Over the last two decades, gold’s rise has been staggering. In 2001, 10 grams of gold cost around Rs5,000; today, it trades at over Rs350,000—a seventyfold increase. Yet, in comparison, returns from real estate and the stock market have, at times, outpaced gold, underscoring the intensity of inflation and asset appreciation in Pakistan’s economy.
The past month has been particularly volatile. The price of 10 grams of gold swung by nearly Rs60,000 during October—opening at Rs343,200, peaking at Rs402,100 mid-month, and closing lower at Rs361,800. Despite these fluctuations, gold remains Pakistan’s preferred safe-haven asset, both as a hedge against uncertainty and as a deeply rooted cultural symbol of wealth, status, and security.
An economist linked to the All Pakistan Gems and Jewellers Sarafa Association (APGJSA) explained that “gold prices in Pakistan are determined by a combination of global bullion trends—such as US interest-rate movements, central-bank purchases, and Exchange-Traded Fund (ETF) flows—and local structural factors, including rupee–dollar parity, import restrictions, smuggling, and seasonal jewellery demand.”
He added that gold-backed ETFs act as a barometer of global investment appetite for the metal, influencing international bullion prices, which ultimately flow into Pakistan’s domestic market through benchmark rates in London and Dubai, adjusted by the prevailing rupee–dollar exchange rate.
A senior APGJSA member noted that “with external risks like shifting monetary policies, escalating conflicts, and domestic vulnerabilities such as foreign exchange instability and informal trade, further bouts of volatility are more likely than a period of sustained calm.”
Government interventions have only added to the uncertainty. In May, Islamabad imposed a temporary ban on gold imports and exports amid tensions with India. The move, an official later disclosed, was intended to prevent the smuggling of gold to India via Dubai and to conserve foreign exchange by curbing luxury imports. However, mounting pressure from the jewellery industry and investors led to the ban’s reversal in October—an act that coincided with another sharp rise in prices.
Analysts say the persistent instability in Pakistan’s economy, coupled with high inflation and ongoing border tensions, has driven investors toward gold as a store of value. The shift reflects declining public confidence in financial markets and paper assets, reinforcing gold’s role as a tangible safeguard.
Reliable market data, however, remains elusive. The lack of a centralized reporting framework makes it difficult to reconcile figures from multiple institutions such as Customs, SBP, and the Federal Board of Revenue. Informal trade, recycling, and smuggling further distort the picture.
In this data vacuum, the World Gold Council (WGC) provides one of the few credible baselines. According to WGC estimates, Pakistan’s gold demand typically ranges between 60 and 90 tonnes per year, peaking in FY2017 amid robust jewellery manufacturing and investment activity. Demand dropped significantly after the pandemic, as record-high prices, import curbs, and rupee depreciation curbed consumption.
The data also indicates a structural shift in how Pakistanis use gold. Jewellery once dominated the market, accounting for nearly 40% of total demand, but investment in bars and coins has steadily risen—from 11% in 2010 to about 26% in 2024. This growing preference for physical investment gold underscores its perceived safety compared to other volatile asset classes.
Despite repeated attempts to gather official commentary, government response remains slow. The State Bank confirmed that questions regarding gold trade data had been forwarded to relevant departments, while Chief Statistician Dr Naeem uz Zafar promised to share customs and household survey figures once available. However, he cautioned that household data may understate true holdings, as respondents tend to conceal or undervalue gold assets.
As Pakistan continues to grapple with inflation, exchange-rate instability, and global shocks, gold’s allure as a “safe” investment remains unchallenged. Yet, in the absence of robust data and regulatory oversight, both traders and policymakers are navigating a market driven more by speculation and sentiment than by structure or certainty.
