Gold prices in Pakistan rose on Monday. A gram now costs PKR 36,788.72, up from PKR 36,442.39 on Friday. The price for a tola increased to PKR 429,105.90, rising from PKR 425,056.80 last week. The surge in gold prices is linked to uncertainty in global trade due to tariff threats between the US and China. Additionally, fears of a US government shutdown and ongoing geopolitical tensions, especially the Russia-Ukraine conflict, are driving investors toward gold.

Interest Rate Cuts Expected

There’s a high chance (96% and 87%) that the Federal Reserve will cut interest rates in October and December, respectively. This expectation helps push gold prices up, boosted by reduced market liquidity from a US bank holiday and a weak US Dollar. Gold acts as a safety net during tough times. It preserves value and protects against inflation. Central banks, especially in emerging markets, continue to build their gold reserves, purchasing a record 1,136 tonnes in 2022. Gold prices closely follow the US Dollar and global events. When the dollar is weak, gold prices usually rise. Concerns about recession and geopolitical unrest further increase the demand for gold as a safe investment.

Bullish Case for Gold

On October 13, 2025, the mix of geopolitical tensions and domestic policy uncertainty creates a strong case for gold’s price increase. The escalating trade issues between the US and China and the potential US government shutdown are driving investors to seek safety in gold, pushing its prices higher. Central banks are maintaining their high demand for gold, creating a solid price support. According to the World Gold Council, net central bank purchases exceeded 500 tonnes in the first half of 2025, continuing a trend we’ve seen in recent years. This strong institutional buying indicates a long-term move towards gold as a core reserve asset. The Federal Reserve’s cautious approach is crucial for traders right now. With a 96% chance of an interest rate cut this month, holding non-yielding gold will become less costly. This monetary easing, which aims to tackle economic challenges, may weaken the US Dollar and enhance gold’s attractiveness. For those trading derivatives, this environment supports taking long positions on gold, with expected higher volatility. Recent data shows the Gold Volatility Index (GVZ) rose over 15% in the past month, reaching levels not seen since the banking issues of 2023. This trend suggests that buying call options could be a smart strategy, allowing traders to profit from rising prices while managing their risk. The current market situation is similar to 2019, when the Fed began cutting rates due to trade war concerns. Back then, gold surged nearly 20% in the second half of the year after breaking out of a long-term range. The parallels to now hint that we might be at the start of another upward movement in gold prices. Create your live VT Markets account and start trading now.

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