Eight-week gold surge rocks global markets amid tariff uncertainty

LAHORE: Gold and silver prices are whipsawing global markets after an eight-week rally sent the metals to historic highs, before a sudden correction triggered by shifting signals from Washington.

Gold briefly climbed past $4,100 per ounce on Thursday, recovering from its steepest two-day crash in twelve years, after plunging nearly 8.6% earlier in the week from a record $4,381 peak. The retreat followed US President Donald Trump’s softened tone on China tariffs. A single comment that rippled through global commodities.

“Gold has risen nearly Rs75,000 [$266.90] per tola in the past four months,” said Faizan Hanif, Director Sales at Hanif Jewellers, in Karachi. “The recent correction of around Rs45,000 [$160.14] was expected as the market was overheated, but demand hasn’t slowed. People still see gold as a safe and stable investment.”

In Pakistan, 24-karat gold is trading at Rs433,862 [$1,544.77] per tola, while global spot prices hover near $4,115 per ounce. Prices had previously topped Rs460,000 [$1,637.01] per tola at the height of the rally.

Global forces driving the rally

The recent surge, analysts say, is rooted in a perfect storm of economic and geopolitical pressures.

Central banks have purchased over 440 metric tons of gold this year, investors have poured billions into gold-backed exchange-traded funds, the US dollar has weakened, and inflation remains stubbornly high. Meanwhile, trade tensions between Washington and Beijing continue to inject uncertainty.

“Each time Trump adopted a hard line on China, gold climbed. When he softened, it slipped,” said one market analyst. “The recent drop was a direct reaction to his tariff remarks.”

Silver’s industrial momentum

Silver has mirrored gold’s meteoric rise, but with even sharper gains. The metal surged 76%, from $29 to nearly $51 per ounce, fueled by strong industrial demand in electric vehicles, solar panels, and chip manufacturing.

“Silver is benefitting not only as a safe-haven asset but also because of its industrial uses in energy and technology,” said Ahsan Naeem, Chief Operating Officer at Floret Securities.

He noted that the ongoing US government shutdown, a weakened dollar index, and aggressive gold buying by China and India, which together acquired about 350 metric tons this year, are driving the surge.

According to Naeem, the market’s recent pullback represents “a phase of consolidation,” adding, “If global instability continues, we could see another strong upward leg soon.”

The current rally has drawn comparisons to previous gold booms during crises, from the Great Depression of the 1930s to the oil shocks of the 1970s, the speculative silver mania of 1980, and the financial panic of 2011.

“Gold and silver have always shone brightest in times of turmoil,” Hanif said. “If this trend holds, prices could reach Rs700,000 [$2,491] per tola within two years.”

Global forecasts remain bullish. Goldman Sachs projects gold could touch $5,000 an ounce by 2026, while silver could rise to $60.

Still, analysts caution that a resolution in US-China trade tensions or a policy shift by the Federal Reserve could reverse the rally as quickly as it began.

As Naeem put it: “When everyone runs toward gold, that’s usually when the top is closer than it seems.”