KARACHI: Pakistan’s gold sector remains overwhelmingly informal, with an estimated 90 percent of all gold trade occurring outside formal channels, leaving the country unprepared to manage the huge supply expected from the Reko Diq gold-copper project unless sweeping reforms are introduced, according to a new UNDP-supported competition assessment.
The ‘Competition Assessment Study of the Gold Market in Pakistan 2025’ report, released by the Competition Commission, says the country is on the verge of a major shift: the Reko Diq mine is projected to produce 17.9 million ounces of gold worth around $54 billion, a level of output that could transform Pakistan’s domestic supply. But the report warns the existing market is highly fragmented, dominated by unregulated dealers, hampered by weak oversight, and distorted by smuggling and price manipulation.
Pakistan currently consumes 60–90 tons of gold a year, most of it imported, exposing the market to global price swings and currency pressures. With no centralized regulator, no mandatory hallmarking system, and limited refining capacity, the sector “remains largely informal, opaque and inconsistent in enforcement,” the study notes. These structural weaknesses have made consumer protection, quality control and price transparency difficult to enforce.
“Without urgent reforms, Reko Diq’s output risks being absorbed into the same inefficient system, perpetuating informality, price distortions, and missed export potential,” the report said.
The study says Pakistan’s gold trade is constrained by “the absence of a unified regulatory framework,” with key institutions withholding essential market and import data. Daily price setting is still driven by informal sarafa market associations, while most gold transactions evade documentation, tax compliance and quality checks.
To prevent Reko Diq’s incoming gold supply from being lost to the informal economy, the report calls for a Pakistan Gold and Gemstone Authority (PGGA) to centralize regulation, implement nationwide hallmarking and assaying, and introduce digital traceability tools such as blockchain. It also proposes a “gold banking” model to formalize household gold and improve financial inclusion.
The study warns that unless Pakistan modernizes its gold governance, the country risks allowing one of its largest-ever resource windfalls to disappear into informal networks rather than contribute to exports, investment, and fiscal stability. It notes that aligning reforms with the Reko Diq production timeline would allow Pakistan to “formalize 50+ tons of annual gold supply” and potentially develop into a regional refining hub.
