Gold market plagued by informality, price manipulation; CCP proposes major reforms

ISLAMABAD (Mudassar Ali Rana) – Pakistan’s gold market remains largely undocumented, opaque and vulnerable to price manipulation, according to a new assessment study released by the Competition Commission of Pakistan (CCP).

The study reveals that more than 90 percent of the country’s gold trade takes place through informal channels, resulting in unreliable pricing, weak regulatory oversight and significant risks of smuggling, under-invoicing and consumer fraud. CCP estimates Pakistan’s annual gold consumption at 60 to 90 tonnes, while official imports during the fiscal year 2024 stood at only USD 17 million, highlighting major discrepancies between demand and documented supply.

The report warns that the absence of credible data on gold imports, sales and purity is undermining effective policymaking. According to the commission, no unified market mechanism exists in Pakistan for setting gold prices. Instead, local trade associations in different cities announce daily rates independently.

The CCP notes that trader cartels and influential groups often distort market prices and supply, while most transactions are conducted in cash due to the undocumented nature of the trade. Instances of adulteration and cheating customers on purity levels were also highlighted.

The assessment further points out that Pakistan has virtually no refining capacity, while complex tax procedures have encouraged smuggling and under invoicing.

The overall regulatory framework for the gold sector remains weak and fragmented. CCP also emphasised the transformative potential of the Reko Diq gold and copper project, estimating that it could produce nearly USD 74 billion worth of gold over 37 years.

The report stresses that strong regulatory reforms must be introduced before the project begins commercial production, as it could significantly reshape the country’s gold supply chain. To bring transparency and stability to the sector, the CCP has proposed wide-l ranging reforms, including, Establishing the Pakistan Gold & Gemstone Authority to regulate licensing, imports and anti-money laundering compliance. linking gold buying and selling with the FBR’s Track and Trace System.

The commission argues that without documented trade, reliable data and clear regulations Pakistan cannot build a fair and competitive gold market. It urged the government to prioritise reforms ahead of Reko Diq’s commercial launch to ensure maximum economic benefit and consumer protection.