Lahore, Pakistan – Over the past two weeks, as the global prices of gold and silver have fluctuated wildly, Waqas Siddiqi has received a flurry of calls from customers to his jewellery store, inquiring about purchases.
As in other countries, the recent rise, decline and rise again in the global bullion market has piqued interest, particularly for those who view gold and silver as an investment.
While gold – and to a lesser extent, silver – has long been a favourite among jewellery buyers in Pakistan, it is a safe place to keep their money that many buyers are seeking these days. And silver appears to be overtaking gold.
“We are primarily in the jewellery business, which is in decline anyway, as people are using precious metals for investment. So, when the rallying started, a few customers came to our shop showing interest to buy silver bars or sell gold,” he told Al Jazeera.
This trend was confirmed by Omer Ehsan, another jeweller who has been running his family business in Lahore for decades. Increasingly, he says, the trend in gold investments – and, moreso in silver – is increasing.
“My customers called to inquire whether they should invest in and join the rally, but [I] advised them caution,” he told Al Jazeera, pointing to a decline in prices last week, before a sudden rally in the past two days.
In the domestic market, the price for 10gm gold increased by more than 20,000 rupees ($71) to reach 440,000 ($1,572) on Wednesday. A similar rise was seen in the price of silver, with 10gm silver reaching 7,800 rupees ($28).
The initial dip, followed by a recovery, reflects broader movements in the international market, where a bullish run on the precious metals ended the previous weekend, and prices fell drastically – an unusual phenomenon as the metals are considered “safe havens” which hold their value in turbulent times.
The Trump effect
Hanif Chand, a 56-year-old jeweller in Karachi and also the former vice president of the city’s jewellery association, told Al Jazeera that the recent upheaval in the bullion market has been driven primarily by fears that an attack on Iran by the United States was imminent, leading to panic in the market.
“Once the news came that Trump is going to take more time to make his decision, markets have calmed down slightly. However, it could also once again skyrocket in case the situation in the Middle East region again flares up,” Chand said.
Ali Aftab Saeed, an independent investment analyst in Lahore, said another factor driving up gold prices since that downturn has been a surge in gold buying in China.
The last year has seen China reduce its holdings of US Treasury securities, which have now fallen below $700bn – a decline of nearly one-half since the November 2013 peak of $1.32 trillion – and replacing these with large-scale purchases of the precious metal.
“The minor fluctuations that you see are due to the market fixing its course, where investors stop buying once a commodity hits a certain price, and then the price corrects itself before [the] next round starts,” he told Al Jazeera. He expects the metals to rally upwards again, he said.
The switch to silver
Razzak Ahmed, a jewellery shop owner in Islamabad, said that due to the high cost of gold, silver is now seen as the metal of choice for many people – and they buy it for both investment purposes and jewellery.
“On an individual level, a small buyer is more interested in purchasing items in silver, be it a silver bar or silver jewellery, because they have enough capital to at least buy something, and the returns on it are significant with the increase in prices,” he told Al Jazeera.
Ahmed recalled that the price per 10gm of silver was close to 4,000 rupees ($14) in April last year compared with its current peak of 15,000 rupees ($54).
Chand agreed, saying that the high price of gold, combined with changing social habits, has contributed to a declining interest in investing in gold jewellery.
Historically, families bought gold or gold jewellery as an investment but also as something that could be passed down to their children when they got married. That is now changing with families opting for high-quality artificial jewellery instead, Chand said.
Now, much of the gold in the country is recycled, he added, while silver is becoming more popular as a commodity to invest in simply because of the skyrocketing prices of gold.
Instead of spending on gold jewellery, “people now prefer investing their money in silver bars if they don’t have enough capital. But even if they do, the day of investing in gold jewellery sets [that are handed down in families] is certainly waning now,” he said.
In 2024, Pakistan imported gold worth $27m, making it a considerably smaller player in the international gold-buying market and ranking it as only the 84th-largest gold importer, according to the Observatory of Economic Complexity.
And, back to the Trump effect
In Lahore, Saeed said many small investors now make their purchases depending on their capital availability. That hardly impacts the market, which is more swayed by the activities of big players.
“And the future prices and their volatility, or lack thereof, depends on the upcoming meeting of US President Donald Trump and his Chinese counterpart Xi Jinping. That will set the future course of action for the price of these metals,” he said, referring to the scheduled meeting between the two leaders in April in China.
Ehsan added that the bullion may continue to fluctuate depending on Trump’s mood. “The market is going up or down solely due to his behaviour and decisions. One morning, he can promise not to attack Iran, and by evening, he will launch [a] missile. All of this makes the market unpredictable.”