KEY POINTS
- Gold hit record highs globally at $3,540/oz and in Pakistan at PKR 376,700 per tola
- Demand surged on Fed rate-cut expectations, dollar weakness, and central bank buying
- Tola, a traditional South Asian gold unit, equals 11.66g
- Analysts project gold may test $4,000 by 2026, though corrections remain possible
LAHORE / LONDON: Gold prices surged to fresh all-time highs worldwide and in Pakistan on Wednesday, driven by a convergence of economic uncertainty, expectations of U.S. monetary easing, and safe-haven demand.
In Pakistan, the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA) reported that the per tola price of gold rose by PKR 6,000 to PKR 376,700, while 10 grams climbed PKR 5,144 to PKR 322,959. Silver also edged up, reaching PKR 4,315 per tola after a PKR 12 increase.
A tola is a traditional South Asian unit of weight for gold. While it officially equates to about 11.66 grams. Despite regional variations, the tola remains a historically and culturally significant measure of gold across South Asia.
At the international level, spot gold traded at a record $3,540 per ounce, according to APGJSA data, reflecting a $60 jump compared to the previous session.
Reuters noted that the rise was underpinned by strong investment flows as central banks and funds diversified their holdings away from currencies and government bonds.
Drivers of the rally
According to the Financial Times, uncertainty over U.S. Federal Reserve independence has fueled investor anxiety, prompting a shift into bullion as a hedge against political and policy turbulence.
The Guardian reported that the anticipation of Federal Reserve rate cuts in the coming months has further boosted gold’s appeal by lowering the relative cost of holding non-yielding assets.
Structural factors driving gold’s rally
The following structural factors might also have underpinned the rally;
- Central bank demand: According to the World Gold Council (WGC), central banks in Asia and the Middle East have been buying gold at record levels to diversify reserves away from the U.S. dollar.
- Reserve diversification: Many emerging economies are structurally shifting toward gold as a hedge against sanctions and currency volatility, WGC data shows.
- De-dollarisation: Countries including China and Russia are increasingly using local currencies and gold in bilateral trade, reinforcing long-term demand, as reported by Financial Times.
- Supply constraints: Global gold mining output has plateaued, with rising production costs and fewer new deposits, a trend highlighted in Reuters commodities coverage.
- Investment demand: Gold-backed ETFs and retail buying continue to draw inflows, adding a consistent layer of investment demand, WGC reported in its mid-year outlook.
- Institutional adoption: Pension and sovereign wealth funds are now treating gold as a mainstream portfolio asset, giving it structural support, noted Bloomberg.
- Debt-driven hedging: With high sovereign debt and concerns over monetary policy independence, gold is increasingly viewed as a counterbalance to fiat risk, as analyzed by MarketWatch, a U.S.-based financial news and market analysis outlet owned by Dow Jones & Company, which also publishes The Wall Street Journal.
Analysts told Reuters that steady demand from central banks—particularly in Asia and the Middle East—combined with heightened retail buying, has tightened supplies.
Meanwhile, the weakening of the US dollar has made gold more affordable for holders of other currencies.
Implications Beyond Borders
The surge matters globally because it reflects a broader erosion of confidence in traditional safe assets.
The World Gold Council said in its mid-year outlook that gold is increasingly serving as a “global insurance asset,” especially amid ongoing conflicts, trade disputes, and volatile equity markets.
For emerging economies, the elevated price provides an incentive to build reserves, while for households in markets like South Asia, higher costs risk dampening traditional jewelry demand.
Future Outlook
Forecasts remain bullish. A Reuters poll of analysts raised the average 2025 gold price projection from $2,756 per ounce in January to $3,220 in July, with some now foreseeing the metal testing $4,000 by 2026 if economic and geopolitical instability persists.
Goldman Sachs expects bullion to reach $3,700 by year-end, with further upside if a U.S. recession unfolds.
Yet, not all projections are one-directional. Analysts cautioned to MarketWatch that any rebound in the dollar, stronger-than-expected U.S. economic data, or aggressive profit-taking could trigger corrections.
Even so, most agree that the era of sub-$3,000 gold has ended, with the market adjusting to a new floor.
The Bottom Line
Gold’s climb is not just a financial story but a barometer of global unease—reflecting weakened trust in political institutions, nervousness over monetary stability, and persistent geopolitical flashpoints.
For investors, policymakers, and households alike, the metal’s record-breaking streak signals that uncertainty remains the defining feature of the global economy.
