Soaring gold

The price of gold has blown past the historic barrier of Rs500,000 per tola on the back of the deep anxieties gripping both global markets and domestic consumers. While international geopolitics provided the spark, the tinder is our own fragile economic confidence.

Globally, investors are fleeing to gold as a traditional safe haven. The primary catalyst is escalating geopolitical tension brought on by US President Donald Trump's ludicrous desire to take control of Greenland, which has rattled financial markets and weakened the US dollar. Though the US stock market has recovered after Trump toned down his rhetoric and assured that there would be no military intervention in Greenland, international gold prices still remain over $4,800 per ounce.

But gold is more than just a financial instrument for Pakistan, largely due to its cultural significance and role in marriages. Rising prices make it even harder for poor families to arrange weddings, where gold jewellery is an important component of the festivities.

Meanwhile, the fact that gold prices are still moving up — despite low inflation, steady stock market growth and relative stability in domestic markets — suggests that something else might be at play. The headline figures for the economy would suggest that investors would put their money into different industries, but the fact that they are instead still choosing gold implies that there are underlying problems that the general public may not yet be aware of.

This also reflects Pakistan's precarious economic position. Even if the economy really is on a reasonable footing, the country still remains vulnerable to the impact of global conflicts thousands of miles away. For true stability, the government needs to keep growing the economy while ensuring sustainability, so that we can one day reach a point where gold in the locker or cash under the mattress are last resorts, rather than primary savings options.