ISLAMABAD: Gold prices have witnessed one of the most dramatic correctionsin recent history, marking the third biggest drop across global and localmarkets as investors unwind positions after unprecedented rallies driven bygeopolitical tensions and economic uncertainties.
The sharp decline came after gold reached all-time highs, with spot pricespeaking above $5,500 per ounce before plunging significantly in a singlesession and continuing losses over subsequent days. In Pakistan, the localmarket mirrored this volatility, with 24-karat gold per tola falling byRs21,500 to settle at Rs490,362, while the price for 10 grams dropped byRs18,433 to Rs420,406, according to data from the All Pakistan Gems andJewellers Sarafa Association.
Over the past three days, cumulative losses in Pakistan have amounted toRs82,500 per tola, reflecting a broader trend of profit-taking and marketrealignment. This follows a period where gold surged on safe-haven demandamid concerns over currency debasement, trade disruptions, and questionssurrounding central bank independence in major economies.
Globally, the correction has been described by analysts as one of thesteepest in decades, with some reports indicating it ranks as the thirdsteepest plunge in history when measured from recent peaks. Spot gold fellsharply, extending declines after hitting records, influenced by astrengthening US dollar that made the metal more expensive forinternational buyers.
The primary trigger for the sell-off appears linked to developments in theUnited States, where President Donald Trump’s nomination of Kevin Warsh asFederal Reserve chair eased fears over potential political interference inmonetary policy. This shift bolstered the dollar, reducing the appeal ofnon-yielding assets like gold and prompting heavy liquidation byspeculators.
Prior to the drop, gold had benefited from heightened uncertainty,including geopolitical risks and expectations of looser policies thatfueled inflows into precious metals. Silver experienced even morepronounced volatility, posting record daily declines in percentage terms,underscoring the broader precious metals sector’s sensitivity to rapidsentiment changes.
In Pakistan, the local gold market remains closely tied to internationalbenchmarks, with rupee-denominated prices adjusting to global fluctuationsand exchange rate dynamics. The recent plunge has provided some relief toconsumers and jewelers after months of elevated costs that impacted weddingseason demand and investment patterns.
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Market participants note that such corrections often follow extendedrallies, where over-leveraged positions amplify downside moves. Despite thesharp fall, gold retains significant year-to-date gains, supported byongoing central bank purchases and diversification away from traditionalreserves.
Analysts suggest the current environment reflects a mix of profitrealization and repositioning, with potential for stabilization if dollarstrength moderates or new uncertainties emerge. However, volatility isexpected to persist as traders assess evolving economic signals.
The three-day slide in Pakistan has erased substantial paper gains forholders, highlighting the risks in commodity investments amidinterconnected global financial markets. Silver prices have also declinedin tandem, further pressuring related assets.
This episode serves as a reminder of gold’s dual nature as both asafe-haven and a speculative instrument, prone to swift reversals whenunderlying drivers shift abruptly.
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