Gold March Toward US$5,000: A New Reality

Gold’s surge in 2025 — the strongest since the 1979 oil shock — would normally invite calls for a painful correction. Prices have doubled in two years. Yet this rally is not built on speculative froth alone. It is anchored in a structural shift that could carry bullion to US$5,000 an ounce by 2026.

Spot gold touched a record US$4,381 in October, crossing milestones once thought distant. The drivers are neither exotic nor temporary - persistent US fiscal deficits, an implicitly weak-dollar posture, geopolitical fractures from Ukraine to NATO’s eastern flank, and rising unease over the Federal Reserve’s independence. In such an environment, gold is not merely a hedge — it is a statement of mistrust in paper promises.

What distinguishes this cycle is the role of central banks. For five consecutive years, they have been diversifying away from dollar assets, stepping in when investor positioning becomes stretched and prices wobble. This behavior places a firm floor under gold, resetting its trading range far higher than in previous cycles.

JP Morgan estimates that while 350 tons of quarterly demand keeps prices stable, actual buying may average 585 tons per quarter in 2026 — a telling imbalance.

Investors are following suit. Gold allocations have risen to 2.8% of total assets, up from 1.5% before 2022 — elevated, but hardly extreme given the scale of global uncertainty.

Forecasts from Morgan Stanley, JP Morgan and Metals Focus converge on the same conclusion, US$5,000 gold is no longer sensational. It is increasingly plausible. The real question is not how high gold can go, but how fragile confidence in fiat currencies has become.

Why Trump Is Edging Toward a Serious Conflict with Venezuela?

US President Donald Trump has significantly escalated pressure on Venezuela and President Nicolás Maduro through sanctions, military action, and economic measures, raising concerns about a potential serious conflict. The latest flashpoint was the US seizure of a sanctioned oil tanker en route to Cuba, part of a broader campaign targeting Maduro’s government, which Washington labels illegitimate and accuses of leading a drug-trafficking network.

Trump has justified his actions on multiple fronts. Migration is a central issue, with the president frequently blaming Maduro for sending criminals, gang members, and former prisoners into the United States. While Venezuelans now number around 770,000 in the United States as of 2023, they represent less than 2 percent of the immigrant population. Most Venezuelan migrants—over 80 percent—remain in Latin America and the Caribbean. Nonetheless, the issue has gained urgency after a Supreme Court ruling led to more than 250,000 Venezuelans losing Temporary Protected Status following the program’s expiration.

Drug trafficking is another pillar of Trump’s campaign. The administration accuses the Maduro regime of facilitating narcotics flows into the US, citing this as justification for lethal strikes on suspected drug-smuggling boats near Venezuela. Since September, US forces have carried out at least 22 maritime strikes, killing dozens of alleged traffickers. These actions have sparked political controversy, particularly after reports that survivors of one strike were killed. While the administration claims these operations have sharply reduced maritime drug trafficking, lawmakers note that the vessels were believed to be carrying cocaine, not fentanyl, and that Colombia remains the region’s top cocaine producer.

Economic pressure, especially targeting oil, has intensified tensions. Oil accounts for nearly 90 percent of Venezuela’s export revenues. The seized tanker reportedly carried over one million barrels of oil, and analysts warn that continued seizures could amount to a de facto naval blockade, crippling Venezuela’s economy and limiting its ability to import food, weapons, and fuel.

Finally, regime change remains an underlying concern. Trump has said Maduro’s days are “numbered” and has deployed an unprecedented US military presence in the region, though he has not ruled out negotiations. Senior officials deny seeking regime change outright, but skepticism remains over whether any agreement with Maduro could be enforced.

PSX: Average daily traded volume up 49.5%WoW

Pakistan Stock Exchange (PSX) continued its bullish momentum during the week, driven by investor optimism following the announcement of IMF Executive Board approval, for the third tranche of US$1.0 billion under EFF and US$200 million under RSF for Pakistan. Sentiments were further boosted after ECC’s decision to adjust OMC and dealer margins on MS and HSD based on national CPI, capped between 5-10% and Incremental electricity package announced by government for industries and agriculture. The benchmark index gained 2,779 points during the week, up 1.7%WoW, to close at an historic high of 169,865 points.

Market participation strengthened by 49.5%WoW with average daily traded volume up to 1.3 billion shares, from 863 million shares in the prior week.

On the macroeconomic front, Workers’ Remittances for November 2025 were reported at US$3.2 billion, up 9%YoY.

Auto sector sales for November 2025 witnessed a surge of 41% YoY, to 19,635 units.

Foreign exchange reserves held by State Bank of Pakistan (SBP) increased by US$12 million to US$14.6 billion as of December 05, 2025. PKR appreciated by 0.04%WoW against the greenback during the week to 280.32 PKR/ US$.

Other major news flow during the week included, 1) ADB okays loan for Karachi-Rohri section, 2) Reko Diq’s US$7 billion deal deepens Pakistan-US economic links, 3) GoP clears PKR659.6 billion power debt, 4) Cabinet approves diversion of 45 LNG cargoes, and 5) Revenue collection grows 27%YoY to PKR12 trillion during FY25.

Textile Spinning, Engineering, Synthetic & Rayon, Textile Composite and Glass & Ceramics were amongst the top performing sectors, while Leather & Tanneries, Jute, Leasing Companies, Refinery and Vanaspati & Allied Industries were amongst the laggards.

Major buying was recorded by Mutual Funds with a net buy of US$22.7 million. Insurance Companies were major sellers with net sell of US$22.6 million.

Top performing scrips of the week were: NML, KAPCO, MLCF, ISL, and LOTCHEM, while laggards included: SRVI, HUMNL, TRG, HINOON, and SAZEW.

AKD Securities foresees the momentum in the benchmark index to continue given successful third tranche disbursement under the EFF & RSF, minimal flood impact and improved credit ratings by global agencies amid falling fixed income yields.

Investors’ sentiments are expected to further improve on the likelihood of foreign portfolio and direct investment flows, driven by improved relations with the United States and Saudi Arabia. This outlook is supported by the lack of alternative investment avenues and the attractive valuation of local equities.

Top picks of the brokerage house include: MEBL, MCB, HBL, OGDC, PPL, PSO, ENGROH, LUCK, DGKC, FCCL, ILP and INDU.

Deteriorating US-Venezuela relations: From Reliable Crude Supplier to Adversary

For decades, Venezuela was among the most dependable suppliers of crude oil to the United States. The relationship was commercially stable and strategically important. Venezuelan heavy crude suited US Gulf Coast refineries, and American demand guaranteed steady revenues for Caracas.

The shift began with the election of Hugo Chávez in 1999, which marked the start of a new ideological era. His government moved sharply away from the earlier market-aligned policies and adopted a confrontational posture toward Washington. This included expropriating foreign oil assets, reorganizing PDVSA under political control, and forging alliances with Cuba, Russia, Iran, and later China. These steps weakened commercial ties and deepened political tensions.

Venezuela’s oil sector also deteriorated due to nationalization, mismanagement, and underinvestment. Production, once above 3 million barrels per day, fell sharply over the next two decades. As quality and reliability declined, US refiners increasingly turned to Canada, Mexico, and domestic shale producers.

Washington responded to Venezuela’s political trajectory—especially under Nicolás Maduro—by imposing sanctions targeting individuals, the oil sector, and financial transactions. These sanctions further reduced the scope for commercial cooperation and pushed Venezuela to redirect crude flows toward China and other alternative buyers. The result is a relationship now defined by distrust rather than the interdependence of earlier decades.

A parallel concern for the United States has been narcotics trafficking in the region. While Venezuela is not a major cocaine producer, it has become a significant transit route between Colombia and global markets.

US agencies have accused certain Venezuelan officials of collusion with organized crime groups. At the same time, the United States faces a domestic drug crisis driven by opioids, fentanyl, and synthetic narcotics entering through regional networks. This has elevated drug trafficking to a major political issue.

Against this backdrop, President Donald Trump’s emphasis on securing access to strategic crude supplies and cracking down on narcotics networks reflects a broader domestic and geopolitical agenda.

Energy security, border control, and regional influence remain high-priority themes in US politics. Venezuela, given its oil reserves and its role in regional trafficking routes, has become central to these debates, turning a once-pragmatic partnership into a deeply strained relationship.

Pakistan must add Gold Backed Funds

Pakistan’s financial regulators often speak of diversification, innovation, and deepening of markets — yet these ambitions rarely translate into actionable reforms. One opportunity stands out, both practical and low-risk, and yet remains untouched - the introduction of gold-backed funds. With the State Bank of Pakistan (SBP) holding nearly 50 tons of gold in its reserves, the country is well-positioned to convert a fraction of its dormant assets into market-enabling financial instruments.

Global central banks have already moved in this direction. In dozens of jurisdictions, gold is no longer treated as a static reserve item but as a strategic financial asset supporting exchange-traded funds (ETFs) and structured investment products. Pakistan, in contrast, keeps its bullion locked away — valuable, but economically inactive. This conservative mindset needs a calibrated rethink.

The proposal is simple and regulator-friendly. State Bank of Pakistan (SBP) should release 100 kilograms of gold through the Pakistan Mercantile Exchange (PMEX), specifically targeting the creation of gold-backed ETFs. The quantity is symbolic when compared to total reserves; it carries no threat to reserve adequacy. But its impact on market depth, investor confidence, and product diversity would be significant. SBP-verified bullion sold through PMEX would enhance transparency, improve price discovery, and finally allow Pakistan to list a credible gold-backed fund in its financial ecosystem.

Once the ETF market is seeded, SBP should gradually import around 150 kilograms of gold, timed with favorable global prices. This ensures reserves are not only restored but increased, allowing for future expansion of gold-based investment products. The goal is to create a sustainable, market-driven cycle — not a one-off intervention.

For regulators, the benefits are clear. Gold-backed funds broaden the investment menu in a market dominated by government securities. They attract new investor segments, document savings that would otherwise sit in unreported physical gold, and add liquidity to PMEX. More importantly, they align Pakistan with global best practices, where commodity-based financial products are now standard tools for stabilizing markets.

The concern that releasing central-bank gold might destabilize reserves is misplaced. A 100-kilogram sale out of a 50-ton stock is hardly a depletion; it is prudent activation of an underutilized asset. Paired with a planned replenishment strategy, the initiative strengthens rather than weakens Pakistan’s reserve position.

Pakistan’s financial system suffers from chronic concentration, limited innovation, and excessive reliance on debt instruments. Gold-backed funds offer a low-risk, high-credibility avenue for reform — one that regulators can implement without disrupting monetary policy or fiscal planning.

It is time to stop treating gold as an untouchable relic of reserve management. If Pakistan truly wants deeper, more diversified capital markets, then adding gold-backed funds is no longer optional — it is need of the time.

 

China backs expanding Iran-Saudi ties

Iran, China, and Saudi Arabia have wrapped up their third Trilateral Committee Meeting, with Beijing once again underscoring its commitment to strengthening relations between Tehran and Riyadh.

The meeting was held Tuesday at Iran’s Foreign Ministry in Tehran and was chaired by Iranian Deputy Foreign Minister Majid Takht-Ravanchi. Saudi Deputy Foreign Minister Walid al-Kharaji and China’s Deputy Foreign Minister Miao Deo also took part.

During the session, the three sides issued a joint statement outlining key commitments and recent progress.

They reaffirmed Iran and Saudi Arabia’s dedication to fully implementing the 2023 Beijing Agreement, the China-brokered deal that restored diplomatic ties between the two nations. Both countries stressed the importance of upholding sovereignty, territorial integrity, independence, and security in line with the UN Charter, the Charter of the Organization of Islamic Cooperation (OIC), and international law.

The statement also praised China’s “continued positive role” in facilitating dialogue and overseeing the agreement’s implementation.

For its part, China reiterated its willingness to support and encourage further cooperation between Tehran and Riyadh in political, economic, cultural, and security areas.

The joint statement highlighted progress in consular coordination, noting that this cooperation helped ensure the safe travel of more than 85,000 Iranian Hajj pilgrims and over 210,000 Umrah pilgrims in 2025.

It also welcomed the expanding exchanges between Iranian and Saudi research centers, universities, media outlets, and cultural institutions.

Addressing regional issues, the three countries called for an immediate end to Israeli military operations in Palestine, Lebanon, and Syria, and condemned violations of Iranian sovereignty.

Iran’s representative expressed appreciation for the steadfast support shown by Saudi Arabia and China during Israel’s June aggression against Iran.

The parties further reaffirmed their backing of a comprehensive, UN-led political solution in Yemen.

Iran and Saudi Arabia restored diplomatic ties in March 2023 after a seven-year break, following a China-mediated agreement that led to the reopening of embassies.

Earlier rounds of the trilateral committee were held in Beijing and Riyadh, where all sides restated their commitment to respecting sovereignty and non-interference, and acknowledged China’s ongoing mediation in support of regional dialogue.

 

Pakistan Plunging Deeper into Debt Trap

If 2025 has revealed anything, it is the alarming disconnect between Pakistan’s economic reality and the self-congratulatory narratives pushed by its policymakers.

The year has passed without a single meaningful breakthrough—no new productive units, no serious investment in balancing, modernization or replacement (BMR), and no expansion in industrial capacity. The economy is drifting, yet those responsible for steering it remain disturbingly complacent.

The import bill tells a story of its own. A 15 percent surge in imports exposes how deeply dependent the country has become on everything from basic raw materials to high-end consumer goods. Simultaneously, a 5 percent decline in exports reflects both declining competitiveness and an industrial sector gasping for breath. This is not a temporary imbalance; it is a structural failure in the making, now accelerating under an administration that mistakes cosmetic measures for policy.

Instead of responding with urgency, Pakistan’s economic managers have taken refuge in denial. They continue celebrating short-term dollar inflows as if these lifelines represent real progress. Their strategy—if it can be called one—rests entirely on IMF bailouts, emergency loans from friendly countries, and repeated rollovers of past obligations. This is not economic management; it is firefighting with borrowed water.

Worst of all, there is no sign of strategic thinking. No national plan for industrial revival, no push for technological upgrading, no attempt to diversify exports, and no investment in productivity. The economy is being held together by ad hoc decisions, political gimmicks, and a misplaced belief that stabilization alone can substitute for growth.

Pakistan is not suffering from a lack of options; it is suffering from a lack of seriousness. Nations facing crises reform their energy sectors, modernize their agriculture, incentivize manufacturing, and push for export-oriented growth. Pakistan, by contrast, has spent 2025 celebrating marginal improvements while ignoring the collapse taking place beneath the surface.

With rising imports, shrinking exports, stagnant industries and policymakers lost in complacency, the direction is painfully clear, Pakistan economy is plunging deeper into debt trap.