KARACHI: As US President Donald Trump ratcheted up his tariff war on the world, gold kept climbing in lockstep to reach a succession of record highs, including in Pakistan.

In recent weeks, gold has globally offered investors a safe haven from the chaos that has enveloped many financial markets since Trump’s tariff announcements on April 2. But at the same time, it has dampened consumption during the wedding season in Pakistan, as buyers and jewelers feel the brunt of high prices, with one tola, or nearly 12 grams, costing about Rs348,700 ($1,200). The average monthly income in Pakistan, meanwhile, is roughly Rs70,000 ($248).

“We can see that gold is hovering around an all-time high,” Kamal Ahmed, a commodities analyst at AKD Securities, told Arab News, adding that gold prices in Pakistan had surged 38 percent since the beginning of the year.

The increase, he said, was triggered by geopolitical tensions, the Russia-Ukraine war and macroeconomic uncertainty worsened by the latest US trade actions.

“When there is uncertainty in the economy, when there is uncertainty in the geopolitical situation, people like to invest in gold,” Ahmed explained, adding that central banks around the world had also bought “a lot of gold” recently to hedge against a possible tariff-driven recession.

In international markets, gold touched a record $3,500 per ounce, about 28.35 grams, on April 22, pushing local prices in Pakistan to fresh highs. 

Analysts suggest more pain ahead.

“I think gold might test $3,800 per ounce this year, and if it breaches that level, you could see $4,500 per ounce by the end of 2025,” said Ahmed.

Global brokerage firm JP Morgan has also predicted gold could rise beyond $4,000 per ounce next year, warning of growing recession risks tied to inflated US tariffs.

The impact on Pakistan, on a tricky path to economic recovery under a $7 billion IMF bailout program, could be severe.

“Investors would prefer to buy gold than invest in equities because they seek a very safe option,” said Ahmed.

For now, the math is simple: If Trump continues his trade war against China, and increases tariffs from the 10 percent base on other countries after his 90-day pause, then it’s likely that gold will continue to rally. But if a compromise with Beijing is worked out that allows both parties to save face, and other countries reach deals with Trump that largely preserve global trade, then the case for gold looks less secure.

On Monday, gold retreated as easing US-China trade tensions boosted investors’ risk appetite and dented demand for safe-haven assets such as bullion, while a stronger dollar also piled on the pressure.

In the domestic market, the price of 24-karat gold per tola fell by Rs3,300 on Monday, bringing it down to Rs348,700 ($1,200). The price of 10 grams of 24-karat gold also saw a decrease of Rs2,833, settling at Rs298,950 ($1,063).

But prices are still too high for most consumers and are dampening the spring/early summer wedding season in Pakistan, where gold is an intrinsic part of celebrations.

At a jeweler’s shop in Karachi’s oldest Sarafa Bazaar, Fatima, a housewife who only gave her first name, stared last week at rows of glittering gold sets she could no longer afford.

“I was buying gold for my daughter’s wedding that we have delayed for now because the prices of gold are very high,” Fatima said. “You either don’t give gold to your children at all or delay the marriage.” 

She said she hoped prices might ease after Eid Al-Adha in June. 

“The prevailing rates have made gold unreachable for the poor,” M. Iqbal, director of the All Pakistan Sarafa Gems & Jewelers Association, said, estimating that about 65 percent of traders in the gold market were actively buying, further driving up demand and prices.

“It’s risen beyond their purchasing power now. Gold has become an investor’s business only.”

He warned that if the tariff war dragged on, gold prices in Pakistan could swell beyond Rs500,000 ($1,780) per tola.

“People are managing their weddings by purchasing lesser quantities of gold,” Iqbal warned. “People who used to buy two or more tolas are now purchasing only half of it, and that too because it’s a tradition.”

Muhammad Yaqoob Ishaq, a jeweler whose family has traded gold for more than a century, said many customers were now opting for artificial jewelry.

“Nowadays artificial jewelry is trending in weddings,” he said. “People have been buying artificial jewelry or using silver ornaments that are gold coated.”

WASHINGTON: The US State Department said on Sunday Washington was in touch with both India and Pakistan while urging them to work toward what it called a “responsible solution” as tensions have risen between the two Asian nations following a recent Islamist militant attack in Kashmir.

In public, the US government has expressed support for India after the attack but has not criticized Pakistan. India blamed Pakistan for the April 22 attack in Indian-administered Kashmir that killed over two dozen people. Pakistan denies responsibility and called for a neutral probe.

“This is an evolving situation and we are monitoring developments closely. We have been in touch with the governments of India and Pakistan at multiple levels,” a US State Department spokesperson told Reuters in an emailed statement.

“The United States encourages all parties to work together toward a responsible resolution,” the spokesperson added.

The State Department spokesperson also said Washington “stands with India and strongly condemns the terrorist attack in Pahalgam,” reiterating comments similar to recent ones made by President Donald Trump and Vice President JD Vance.

India is an increasingly important US partner as Washington aims to counter China’s rising influence in Asia while Pakistan remains a US ally even as its importance for Washington has diminished after the 2021 US withdrawal from neighboring Afghanistan.

Michael Kugelman, a Washington-based South Asia analyst and writer for the Foreign Policy magazine, said India is now a much closer US partner than Pakistan.

“This may worry Islamabad that if India retaliates militarily, the US may sympathize with its counter-terrorism imperatives and not try to stand in the way,” Kugelman told Reuters.

Kugelman also said that given Washington’s involvement and ongoing diplomatic efforts in Russia’s war in Ukraine and Israel’s war in Gaza, the Trump administration is “dealing with a lot on its global plate” and may leave India and Pakistan on their own, at least in the early days of the tensions.

Hussain Haqqani, a former Pakistan ambassador to the US and a senior fellow at the Hudson Institute think tank, also said that there seemed to be no US appetite to calm the situation at this moment.

“India has a longstanding grievance about terrorism emanating or supported from across border. Pakistan has a longstanding belief that India wants to dismember it. Both work themselves into a frenzy every few years. This time there is no US interest in calming things down,” Haqqani said.
ESCALATING TENSIONS
Muslim-majority Kashmir is claimed in full by both Hindu-majority India and Islamic Pakistan who each rule over only parts of it and have previously fought wars over the Himalayan region.

Hindu nationalist Indian Prime Minister Narendra Modi has vowed to pursue the attackers to “the ends of the earth” and said that those who planned and carried out the Kashmir attack “will be punished beyond their imagination.” Calls have also grown from Indian politicians and others for military action against Pakistan.

After the attack, India and Pakistan unleashed a raft of measures against each other, with Pakistan closing its airspace to Indian airlines and India suspending the 1960 Indus Waters Treaty that regulates water-sharing from the Indus River and its tributaries.

The two sides have also exchanged fire across their de facto border after four years of relative calm.

A little-known militant group, Kashmir Resistance, claimed responsibility for the attack in a social media message. Indian security agencies say Kashmir Resistance, also known as The Resistance Front, is a front for Pakistan-based militant organizations such as Lashkar-e-Taiba and Hizbul Mujahideen.

Ned Price, a former US State Department official under the administration of former President Joe Biden, said that while the Trump administration was giving this issue the sensitivity it deserves, a perception that it would back India at any cost may escalate tensions further.

“The Trump Administration has made clear it wishes to deepen the US-India partnership — a laudable goal — but that it is willing to do so at almost any cost. If India feels that the Trump Administration will back it to the hilt no matter what, we could be in store for more escalation and more violence between these nuclear-armed neighbors,” Price said.