Gold prices in Pakistan dropped on Friday. The cost for one gram of gold fell to 41,461.99 Pakistani Rupees (PKR) from 41,523.44 PKR the day before. Meanwhile, the price per tola decreased to 483,604.60 PKR, down from 484,321.20 PKR. FXStreet determines gold prices by converting international rates to local currency and measurements. These prices change daily and serve as reference points. They may not exactly match local market rates.

Gold As A Safe Haven Asset

Gold is viewed as a safe-haven asset, providing protection against inflation and currency decline. Central banks are significant buyers, having added 1,136 tonnes to their reserves in 2022, as reported by the World Gold Council. Gold usually moves in the opposite direction of the US Dollar and US Treasuries. Price shifts can be affected by geopolitical tensions, recession worries, and interest rate changes. A strong US Dollar typically lowers gold prices, while a weaker Dollar can push them up. We are witnessing a slight decline in gold prices, following a strong performance in the last quarter of 2025. The market is currently responding to mixed signals, especially regarding the US Federal Reserve’s upcoming actions on interest rates. This uncertainty creates a tense environment, where a significant price movement may be on the horizon. In this context, traders should focus on strategies that benefit from price volatility rather than choosing a specific direction. Buying straddles or strangles on gold futures—especially prior to the next inflation report—could be a smart way to capture any breakout. This method allows us to profit whether gold rises due to recession fears or falls on a hawkish Fed statement.

Central Banks And Volatility

Looking back, central banks have maintained a strong buying trend, adding over 950 tonnes to their reserves through 2025. This continued demand provides solid support for gold. However, the implied volatility in gold options, as measured by the Cboe GVZ index, has increased to 17% this month, up from 13% in November 2025. This indicates the market is expecting a larger price movement soon. The inverse relationship with the US Dollar continues to be crucial. The dollar index (DXY) has been trading within a narrow range since late last year, suggesting a potential breakout. A significant movement in the Dollar outside its 103-105 range—held since late 2025—would likely result in a major corresponding move in gold prices. Additionally, ongoing geopolitical tensions in Eastern Europe are providing a safety net for safe-haven assets. This persistent risk reduces the likelihood of a sharp decline in gold prices, even if interest rate expectations shift. We should stay prepared for a sudden move, as the current stability seems temporary. Create your live VT Markets account and start trading now.

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