LAHORE: Gold has climbed to levels few imagined possible, quietly reshaping behavior across Pakistan’s jewelry markets. On Wednesday, spot gold surged to a record $4,641.40 an ounce, driven by worsening geopolitical tensions, economic uncertainty, and expectations that the US Federal Reserve will cut interest rates. Gold, which does not offer interest income, historically performs best when rates are low and uncertainty is high, making it a natural refuge for nervous investors.

That logic is now playing out in Pakistan as well.

In the local market, gold recently touched Rs 481,000 per tola (11.66 g) before easing slightly on Thursday as global prices pulled back.

International prices fell by $37 an ounce to $4,601, ending a three-day rally. Locally, 24-carat gold dropped by Rs 3,700 per tola to Rs 482,462, and by Rs 3,172 per 10 grams to Rs 413,633.

Even after the correction, prices remain near historic highs, and that, jewellers say, has fundamentally altered who buys gold, how they buy it, and why.

The role of gold

For decades, gold in Pakistan has served two roles: cultural and financial. It is both a wedding essential and a store of value. But today, those two functions are diverging.

Faizan Hanif, Director of Hanif Jewellers, told Pakistan TV Digital that gold demand has increased significantly because it acts as a safe haven.

"People are buying more gold rather than selling, using it as a hedge against inflation shocks and as a superior asset for better returns compared to other options in the country."

Dahim Sheikh, co-owner of Sonica Jewellers, explains that demand has not disappeared but has shrunk.

“Gold has surged by about Rs 100,000 in a year, but it has not stopped wedding customers. If there were 10 customers before, there are still 10 now. What has changed is weight. Those who used to buy 10 tolas now buy eight. Volume is the same, but weight is lower.”

In other words, people are still coming, but they are buying less gold per visit. Cultural obligations like weddings still require jewelry, but rising prices force families to compromise on quantity.

Sheikh says bullion demand has jumped.

“People who already had bullion are now converting it into jewelry, and new buyers are entering bullion trading. Gold is now seen more as an asset than an ornament.”

Buy gold or artificial jewelry?

But for many households, even reduced purchases are becoming unaffordable. Amir Iqbal, owner of New Iqbal Jewellers at Lahore’s Liberty Market, describes a very different trend unfolding at the retail level.

“Customers now mostly bring in old jewelry passed down by grandmothers to get it repaired, polished, or slightly redesigned. Earlier, people used to save and buy two, three, or five tolas. Now, many cannot even afford one.” He noted that people are now buying artificial jewelry or resorting to silver to make jewelry.

Instead of buying new sets, families are recycling old ones, refreshing inherited jewelry rather than adding new weight. The effect, Iqbal says, is visible across the trade.

“Jewellers who used to make three-tola sets now make one-tola sets. The impact is definitely there. Traditional demand is slowing.”

What is emerging, then, is a divided gold market. On one side is investment demand, rising with every bout of geopolitical tension, currency uncertainty, or interest rate speculation. For this group, gold is not fashion or tradition; it is insurance.

On the other side is consumption demand, increasingly constrained by affordability. Weddings still happen, traditions still hold, but households are adapting by buying less, reusing more, and delaying purchases where possible. The result is a paradox: record prices alongside shrinking accessibility. Gold is shining, but not for everyone.

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Gold’s record rally Is changing how Pakistan buys gold