Gold prices in Pakistan rose on Monday. The price for gold increased to 41,929.85 Pakistani Rupees (PKR) per gram, up from 41,220.77 PKR last Friday. The cost per tola also went up to PKR 489,061.50, compared to PKR 480,791.00 previously. FXStreet calculates these prices by adjusting international rates to the local currency and updates them daily. The prices serve as a reference, but local rates may vary slightly based on market conditions.

The Role and Importance of Gold

Gold is vital as a store of value and a medium of exchange. It is viewed as a safe asset, helping to protect against inflation and currency loss. Central banks are the largest holders of gold. In 2022, they added 1,136 tonnes of gold worth around $70 billion, marking the highest annual purchase ever recorded. Gold prices typically move in the opposite direction of the US Dollar and US Treasuries. When the Dollar weakens, gold prices usually rise. Conversely, a strong stock market might cause gold prices to fall. Geopolitical instability or fear of recession can boost gold prices because of its safe-haven reputation. Lower interest rates often lead to higher gold prices. The value of the US Dollar is critical, as fluctuations significantly affect gold prices. The recent rise in gold prices to PKR 41,929.85 per gram reflects a stronger international gold market paired with a weaker US Dollar. This trend indicates that we should explore strategies that capitalize on further softness in the Dollar in the coming weeks. The main focus should be on the global XAU/USD pair rather than just the local price in Pakistan.

US Economic Policies and Their Impact on Gold

The US Federal Reserve’s cautious signals in late 2025 have been significant. Lower interest rates decrease the cost of holding gold, which doesn’t earn interest. With December 2025 inflation figures steady near 2.3% and recent manufacturing PMI data showing slight contraction, the market is anticipating a higher chance of a rate cut before the third quarter. This environment is favorable for gold, suggesting that investing in futures or buying call options could be beneficial. The clear inverse relationship between gold and the US Dollar is evident, as the Dollar Index (DXY) dropped from about 104.5 in late 2025 to around 101.75 now. Further weakness in the Dollar should support gold prices. We should keep an eye on upcoming US economic data, as any signs of a slowing economy could boost this trend. Geopolitical factors also support gold prices, as ongoing supply chain uncertainties since 2025 continue to drive demand for this precious metal. While stock markets have remained stable, this underlying risk is encouraging investments in hard assets. This suggests that any dips in gold prices may be short-lived and seen as opportunities to buy. Additionally, strong demand from central banks continues, a trend that has been consistent over the past few years. The latest World Gold Council data for Q4 2025 showed that central banks added over 280 tonnes globally, helping to establish a solid price floor. This institutional demand acts as a buffer against sharp sell-offs. This optimistic outlook is reflected in derivatives markets. Recent CFTC data reveal that managed money has increased its net-long position in gold futures to the highest level in over a year. This positioning signals that many in the market expect prices to keep rising. Therefore, we should consider strategies that align with this upward trend, such as using options to manage risk on long positions. Create your live VT Markets account and start trading now.

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