In recent months, Pakistan’s gold market has faced an unexpected flood of price hikes, leaving ordinary buyers stunned. Gold is a key part of Pakistan’s culture. It features in wedding jewellery and is also a safe investment. But now, it feels out of reach. I’ve noticed that even small ornaments that used to cost a few thousand rupees now cost too much. This surge has turned curiosity into concern. The question arises: Why did gold prices increase in Pakistan? Let’s dive into the facts and understand the reasons behind this golden storm.
Key Highlights:
- Weak Pakistani Rupee drives local gold prices higher.
- Global market volatility adds fuel to the price surge.
- Inflation and reduced sales create a tricky market.
- People are shifting towards exchange-only purchases.
Why Did Gold Prices Increase in Pakistan?
Gold prices are rising in Pakistan and this issue is not local. It shows a global economic imbalance. Last month, I visited a local jeweller. He told me gold sales had dropped by nearly 40%, but prices kept rising. The weak Pakistani rupee plays a massive role here, amplifying international rates domestically. Import restrictions and global inflation have worsened the situation. Now, people see gold as a luxury item rather than a typical investment.
Main Reasons:
- Weak Pakistani Rupee: Constant depreciation increases gold import costs.
- Global Market Volatility: Investors rush towards safer assets like gold.
- Local Inflation: Rising fuel and food prices reduce people’s buying power.
- Reduced Sales: Jewellers report record-low transactions this year.
To compare the trends, check the data below. It shows the average gold rate movement in Pakistan over the last six months.
| Month | 24K Gold per Tola (PKR) | Change (%) |
| April 2025 | 228,000 | — |
| May 2025 | 232,500 | +2.0% |
| June 2025 | 238,000 | +2.4% |
| July 2025 | 246,500 | +3.6% |
| August 2025 | 252,000 | +2.2% |
| September 2025 | 260,000 | +3.1% |
What Is Causing the Price of Gold to Rise Globally?
Gold’s global rise comes from uncertainty. This can be due to inflation, fears of recession or wars. Investors regard gold as a safe haven asset, relying on it when stock markets falter. The trend is not modern history tells that during ups and downs gold always shines brighter. The same trend now reflects in Pakistan, magnified by currency instability and policy uncertainty.
Global Drivers:
- Economic instability and inflation fears.
- Central bank gold reserves are rising across Asia.
- Continuing political discord is influencing global exchanges.
- Demand surged from investors avoiding volatile currencies.
Why Does the Price of Gold Go Up in a Crisis?
In hard times, people rely gold more than money or paper currency. While COVID-19 gold costs next level. Investors sold stocks for the metal. Pakistan’s financial crisis has led to high inflation and a weak rupee. As a result, gold has become a “safety lock.” I have seen friends sell property and buy gold for emergency support.
Crisis Factors:
- Investors seek stable, inflation-proof assets.
- Governments struggle to stabilise currency value.
- Lower confidence in banks boosts gold demand.
- Panic buying among retail investors.
What Happens to Gold When Interest Rates Rise?
Whenever interest rates high, gold often seems less demand. This is because investors can get better returns from fixed-income assets. In Pakistan, people still prefer gold even with higher rates. This is mainly because the rupee’s devaluation wipes out real returns on savings.
Insights:
- Globally, higher rates reduce gold’s short-term appeal.
- Locally, a weak rupee nullifies interest rate benefits.
- Investors hedge against inflation despite high rates.
- “Exchange-only” purchases dominate jewellery markets.
For today’s gold prices, check:
Is Now a Good Time to Buy Gold?
That depends on your financial goals. If you are looking for long-term security, gold still holds value. But for short-term profit the market remains risky due to high volatility. From my personal perspective, I am holding off new purchases until the rupee stabilizes. but keeping a small reserve of gold remains a wise hedge.
Buying Tips:
- Buy in small quantities during market dips.
- Avoid panic buying during media hype.
- Compare international rates before investing.
- Always check local gold association price updates.
Weak Pakistani Rupee – The Root of Gold’s Skyrocketing Price
The weak Pakistani rupee remains the main driver behind gold’s price flood. When the rupee drops against the U.S. dollar, local gold prices rise quickly. This happens because people sell gold worldwide in dollars. Even small currency drops make huge price impacts for local buyers. When I swapped currency for a family event recently, I felt shocked. The same total of rupees right now obtains a lot less gold than it did two months prior. This demonstrates how currency weakness is hurting affordability.
Quick Insights:
- Each rupee’s depreciation raises import costs.
- Jewellers adjust prices daily due to unstable forex rates.
- Rupee instability discourages long-term investment planning.
- Import restrictions amplify local market tensions.
Global Market Volatility and Its Ripple Effect
The word Global Market Volatility describe the variability shaking economies international. Fluctuating oil prices U.S. interest rate policies. And Middle East tensions all push investors toward safer assets like gold. Pakistan, being an import-dependent economy, feels these waves more harshly than others. Gold prices react instantly to any international news even before local markets open. I saw this trend while tracking gold prices each day. One global shock can completely change the day’s price.
Volatility Factors:
- Stock market instability and inflation fears.
- Investors diversify to minimise financial risk.
- International conflicts raise the demand for safe assets.
- Economic slowdowns trigger gold buying globally.
Gold as a Safe Haven Asset
Gold has always been a Safe Haven Asset, especially during economic downturns. People buy gold not for profit but for protection. In Pakistan, this belief is even stronger. Families prefer to store their wealth in gold instead of banks. My uncle has done this for years. He calls gold “the only friend that doesn’t betray during crises.”
Why It’s Considered Safe:
- Retains value even when currencies weaken.
- Easily liquidated during emergencies.
- Offers security against inflation and market crashes.
- Maintaining purchasing power across generations.
Local Inflation and Its Direct Impact on Gold
High Local Inflation affects gold demand both directly and indirectly. When daily essential prices go up, people have less money to invest. Inflation also weakens the rupee, indirectly pushing gold rates up. From my observation, middle-class families are now. Saving for survival; this is now a priority, not buying jewellery. This marks a sharp change from past habits.
Inflation Effects:
- Reduced purchasing power limits investment capacity.
- Jewellers report fewer buyers and smaller purchases.
- Inflation-driven imports increase local market pressure.
- Price stability becomes harder to predict.
Reduced Sales in Local Markets
Due to all these factors, Reduced Sales have become the new normal in gold bazaars. Jewellers across Karachi, Lahore and Islamabad report minimal footfall compared to previous years. Even during festive seasons, customers mostly window-shop rather than purchase. A goldsmith I recently spoke to said, “We polish more old jewellery these days than sell new ones.” That perfectly summarises the current sentiment.
Current Market Picture:
- Gold sales are down nearly 35–40% this quarter.
- Purchasers are choosing more delicate styles or pre-owned ornaments.
- Insecurity obstructs future investment.
- Many dealers now rely on old gold exchanges.
Exchange-Only Purchases Trend
An interesting pattern now dominates the market Exchange-Only Purchases. People are trading in old ornaments for new designs instead of buying fresh gold. This helps them avoid full payment while adjusting for the rising rates. On my last jewellery visit, almost every customer had something to exchange. This shows just how common this trend has become.
Reasons Behind Exchange Trend:
- Buyers want to minimize cash outflow.
- Jewellers promote exchanges to maintain business flow.
- Gold owners adapt to price instability creatively.
- Keeps market movement alive despite fewer new purchases.
FAQs
Q1: Why did the gold price collapse in the past?
A: It often falls when inflation calms down or when investor confidence returns to stocks.
Q2: What happens if the rupee strengthens?
A: Gold prices can down locally even if global rates keep steady.
Q3: Is gold still a safe investment in 2025?
A: still, timing is significant, buy when the market stabilises.
Q4: How can I track gold price changes easily?
A: Use reliable online trackers like the World Gold Council.
Conclusion
Gold’s surge in Pakistan is more than just a market reaction it’s a mirror reflecting economic uncertainty. The weak rupee, global ups and downs and local inflation have made gold too expensive for many. However, as history demonstrates, gold always retains some of its luster. For those who plan wisely, it serves as a timeless shield for assets during tough times.