Gold rally gives forex reserves a huge push

KARACHI: Pakistan’s external financial position has strengthened significantly, buoyed by a powerful rally in global gold prices.

According to an analysis by Mohammed Sohail, CEO and Founder of Topline Securities, the surge in the precious metal has boosted the value of the country’s gold holdings and reshaped the overall composition of its external reserves.

Gold prices in Pakistan increased massively on Friday in line with their gain in the international market. In the local market, gold price per tola reached Rs456,900, a new all-time high, after an increase of Rs14,100 during the day.

Gold prices have surged more than 50 percent during 2025, marking one of the strongest yearly performances for the metal in recent times. According to Mohammed, this appreciation has translated directly into a healthier balance sheet for Pakistan, lifting the value of its gold reserves to around USD9 billion.

As a result, the nation’s total reserves — including liquid foreign exchange holdings — have climbed to nearly USD23 billion, a level described as being “near an all-time high.”

The rally has also triggered a structural transformation in Pakistan’s external buffers. Historically, gold accounted for roughly one-third of the country’s liquid reserves over the past decade. Following the 2025 surge, that ratio has shifted markedly, with gold now constituting about two-thirds of Pakistan’s liquid reserve composition.

Analysts view this shift as a strengthening factor for the country’s external position, enhancing resilience and supporting macroeconomic stability. The data illustrates a clear upward trend through early 2025.

Economists say the sharp increase in gold-backed reserves offers a vital cushion for the State Bank of Pakistan (SBP), improving the country’s external stability and policy flexibility. The trend also sends a constructive signal to international financial institutions — including the IMF — and to global investors monitoring Pakistan’s emerging markets outlook.