Pakistan's Gold Prices Reach All-Time Highs as the World Market Rises — Experts Demand Financial Reforms

On a cool autumn morning in Pakistan, as global markets were roiled by stress and uncertainty, gold's glitter gleamed brighter than ever. The precious metal was not only rising; it was shattering traditional ceilings, causing anxiety, discussion, and a reconsideration of how Pakistan's markets deal with gold.

Gold prices climbed substantially overseas. In international bullion markets, the price increased by $55 per ounc, driving the spot rate to $4,071 — occasionally reaching $4,078 in brief bursts of enthusiasm. This spike occurred amid increasing safe-haven demand, spurred by growing US-China trade tensions and anticipation that the US Federal Reserve may loosen its monetary policy. Silver, too, caught the wave, surging by roughly 2.2% on the day.

The worldwide gold rush spilled over into Pakistan's domestic market. The gold price per tola increased by Rs 5,500, hitting a record Rs 428,200. Meanwhile, 10-gram gold increased by Rs 4,715, reaching Rs 367,112. These gains were not minor adjustments; rather, they reshaped standards in a market that had long been used to volatility.

For local perspective, the price of 24-karat gold per tola in January 2025 was approximately Rs 283,015. According to calculations, the price has risen by about 46.4% in the last nine months. Though the monthly pace fluctuated, gold climbed gradually virtually every month, with major surges in February, September, and October, resulting in an average monthly gain of around 4.33%.

What Is Driving Gold Higher?

The causes for gold's current rise are multifaceted.

First, gold is increasingly seen as a safe haven. With actual returns on rupee-based assets perceived as low or falling, consumers and investors are turning to gold to preserve wealth. The metal's rise indicates that inflation expectations remain strong, and many believe that the policy rate is insufficient to provide positive real yields.

Second, the increase is not a seasonal blip. The increases have lasted months and are more consistent with macroeconomic dynamics — currency depreciation, monetary instability, global liquidity patterns — than with festival demand or jewelry sales alone.

Third, because Pakistan is still a net gold importer, international prices and the USD/PKR trend compound the domestic impact. As the rupee falls and global gold prices rise, local prices rise sharply.

Fourth, the scarcity of suitable non-physical gold assets encourages many people to retain metal physically, which fuels demand and can lead to speculative pressures.

Reconsidering Pakistan's Gold Policy:

Policymakers are raising concerns about structural instability in Pakistan's financial system, rather than merely pricing. Farhat Mahmood argues in a thinking paper that regulated gold financial products should be introduced and institutionalized.

Her proposals center mostly around:

1. Gold Exchange-Traded Funds (GETFs)

These would be governed by the SECP and traded on the Pakistan Stock Exchange. Physical gold would be maintained by licensed custodians subject to independent audit, whereas units provide investors with exposure to gold without requiring them to physically handle the metal. Redemption and creation in bulk would assist to match market prices with intrinsic value.

2. Sovereign Gold Bonds (SGB)

These government-issued bonds, priced in rupees but tied to world gold prices, would have tenors ranging from 5 to 8 years. Investors might redeem them earlier (after year 3), and minor coupons may be attached, particularly if held to maturity. Long-term holdings may be eligible for tax breaks to discourage speculative activity.

Together, these devices would transfer savings from physical hoarding to regulated, liquid markets. They might assist to reduce speculative pressure on gold, strengthen capital markets, increase financial inclusion, and give safer access to gold exposure.

The Path Ahead: Opportunity Meets Fear:

But even as gold rises, there is still uncertainty. Risk sentiment around the world can change rapidly. Corrective pressures might appear if interest rates change or if demand for safe haven investments declines. Households, traders, and investors will continue to modify their methods to either ride the wave or protect themselves from its negative aspects in the meanwhile.

The gold boom is both a symptom and a signal for Pakistan. It highlights discrepancies in investor trust in intangible financial assets, capital market depth, and monetary attractiveness. Though they demand public trust, regulatory infrastructure, and political will, the plans for GETFs and SGBs offer significant pathways.

Gold's brilliance on that stage serves as a barometer in addition to being dazzling. In the midst of rising tension, Pakistan is currently showing signs of unique hope.