By Staff Reporter
ISLAMABAD: The competition watchdog on Wednesday called for sweeping reforms to the nation’s gold market, including the creation of a new regulatory authority, to tackle rampant undocumented trading that accounts for nearly 90% of activity in one of South Asia’s largest consumers of the metal.
The Competition Commission of Pakistan’s first-ever assessment of the sector, released by its Centre of Excellence in Competition Law, lays bare a fragmented industry plagued by weak oversight, opaque pricing and cash-based deals that distort competition and fuel illicit flows.
Pakistan consumes between 60 and 90 tonnes of gold annually, driven by cultural demand for jewellery and investment, the report said. Yet more than 90% of trading occurs outside formal channels, with the market almost entirely reliant on imports valued at $17 million in fiscal 2023-24 and $31 million in calendar 2023.
Official reserves stood at 64.75 tonnes in early 2025, according to the study, which warns that without changes, the country risks missing out on integrating output from major projects like the Reko Diq copper-gold mine. That venture is projected to generate up to $74 billion over its 37-year life, potentially reshaping domestic supply chains.
“Modernising the gold sector would enhance transparency, curb illicit trade, protect consumers and unlock significant economic value — particularly as Pakistan prepares for the commercial rollout of Reko Diq,” the Competition Commission of Pakistan said in the report.
The analysis identifies entrenched bottlenecks undermining fair play, starting with informal networks that dominate through poor documentation and cash transactions, allowing them to dictate prices and supply. Daily gold rates are set largely by trader associations rather than transparent mechanisms, leaving scope for manipulation and premiums.
Regulation is splintered across bodies like the Ministry of Commerce, Federal Board of Revenue, State Bank of Pakistan, Pakistan Gems and Jewellery Development Company and Trade Development Authority of Pakistan, leading to inconsistent policies and enforcement holes.
The repeated suspension of SRO 760(I)/2013, which covers gold jewelry imports and exports, exemplifies this instability. High taxes, complex compliance and lax anti-money laundering checks push activity underground, encouraging smuggling and under-invoicing.
Pakistan has negligible refining capacity, inadequate hallmarking facilities and persistent purity problems that erode consumer trust. Data shortages on imports, trader registrations, sales and quality hamper policymaking.
To fix this, the commission urged establishing an autonomous Pakistan Gold and Gemstone Authority to unify rules on licensing, imports, compliance and alignment with anti-money laundering and counter-terrorism financing standards. It also pushed for mandatory nationwide assaying and hallmarking to enforce purity, bolster consumer protection and aid exports.
Other proposals include digitising the value chain via blockchain traceability tied to the revenue board’s Track and Trace system, and launching a Gold Banking System modelled on Turkey’s to draw household holdings into formal finance. Strengthened data governance, with centralised reporting and scientific price monitoring, rounds out the reform slate. The moves aim to harness the sector’s potential amid Reko Diq’s ramp-up, though the report cautions that absent action, domestically mined gold won’t flow into regulated channels.
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