Gold prices in Pakistan rose to PKR 39,411.86 per gram, up from PKR 38,905.29 on Friday, according to FXStreet. The price per tola also increased to PKR 459,694.80, up from PKR 453,783.70 the day before. Gold prices in Pakistan are based on international rates, converted into local currency. FXStreet updates these prices daily. Please note that local prices may vary slightly from these figures.

The Importance of Gold as a Safe Asset

Gold has always been valued as a safe investment. It retains its value and protects against inflation and currency drops since it is not tied to any government. Central banks hold the most gold to strengthen economic confidence. In 2022, they purchased 1,136 tonnes worth around $70 billion, the highest amount ever in a single year. Gold prices tend to rise when the US Dollar weakens or during market instability. Factors like geopolitical issues, interest rates, and overall economic conditions affect gold prices, which often move in opposition to the dollar. A weaker dollar usually means higher gold prices since gold is priced in dollars. Given the strong trend we observed in 2025, we can expect gold prices to continue rising in early 2026. Last year’s gain of 65%, the largest since 1979, was fueled by ongoing factors. Thus, strategies to benefit from rising gold prices, such as taking long positions in futures or buying call options, are worth considering.

Market Dynamics and Strategies

The market anticipates aggressive interest rate cuts from the US Federal Reserve this year, putting pressure on the US Dollar. Recent data supports this view; December 2025’s Consumer Price Index (CPI) cooled to 2.1%, approaching the Fed’s target and offering room for policy adjustments. This environment benefits gold. This dollar weakness is widespread, aiding assets priced in dollars. The Euro is trading above 1.1700, and the Pound Sterling has crossed 1.3450, indicating that gold’s movement reflects a larger macro trend against the dollar. For traders in derivatives, buying call options on gold futures or related ETFs becomes an attractive strategy. This allows for capturing potential gains while minimizing risk on the position. However, we must be cautious as implied volatility may be higher due to a strong expectation of rising prices. Moreover, central bank demand is a significant support for gold. Data from the World Gold Council for Q4 2025 shows that central banks, especially in emerging markets, continued their record buying trend. This consistent purchasing creates a solid price floor for gold, preventing major drops. The main risk to this outlook would be unexpectedly strong US economic data that might make the Federal Reserve reconsider its planned rate cuts. A surprising rise in inflation or an excellent jobs report could quickly reverse the dollar’s decline and put pressure on gold. Therefore, using options or setting stop-loss levels is essential to manage risks from sudden changes in the Fed’s stance. We must also pay attention to the relationship between gold and risk assets. Last year’s surge in gold coincided with geopolitical tensions and stock market uncertainties. Renewed weakness in major stock indices might lead to more investors seeking safety in gold, accelerating its price rise. Create your live VT Markets account and start trading now.

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