Gold prices in Malaysia rose on Monday, according to FXStreet data, reaching 556.19 Malaysian Ringgits (MYR) per gram, up from MYR 555.05 on Friday. The price of Gold per tola increased to MYR 6,487.29 from MYR 6,474.02, reflecting the adaptation of international prices to local currency.
Central banks are the largest holders of Gold, accumulating 1,136 tonnes worth around $70 billion in 2022. Notable increases in reserves have been observed in emerging economies like China, India, and Turkey, aiming to strengthen economic perceptions.
Inverse Correlation With The US Dollar
Gold tends to have an inverse correlation with the US Dollar and US Treasuries, meaning when the Dollar weakens, Gold typically rises. The precious metal is generally viewed as a safe-haven asset and a hedge against inflation and depreciating currencies.
Gold price fluctuations result from multiple factors including geopolitical instability, recession fears, and interest rate changes. A weaker US Dollar often leads to higher Gold prices, while a stronger Dollar tends to stabilise them. The market rates are updated daily, with prices expressed in various measurement units for local relevance.
Given the slight increase in gold prices, we see this as part of a larger trend supported by fundamental economic factors. The metal’s value is inversely correlated with the US Dollar, and with the US Dollar Index (DXY) having retreated from its 2023 highs to hover around the 101 mark, a key headwind for gold has been removed. This environment suggests that gold has room to move higher in the coming weeks.
A critical factor is the shift in interest rate policy we have witnessed over the past two years. After peaking at over 5.25% in 2023, the US Federal Reserve has since lowered rates, which reduces the opportunity cost of holding a non-yielding asset like gold. With markets now pricing in a potential pause or only modest adjustments in early 2026, gold remains an attractive option for traders.
Central Bank Demand And Global Economic Outlook
We should also consider the persistent demand from central banks, which provides a strong floor for the price. We recall that central banks added a record 1,136 tonnes in 2022, and reports from the World Gold Council showed this aggressive buying continued through 2023 and 2024. This consistent demand, particularly from emerging economies, creates a fundamental price support that limits downside risk.
Considering the ongoing geopolitical uncertainties and forecasts for slower global GDP growth in 2026, gold’s role as a safe-haven asset is highly relevant. A weaker US dollar environment combined with these risks reinforces the case for holding gold as a hedge. This makes it a valuable tool for diversifying away from potential volatility in equity markets.
For derivative traders, this outlook supports a cautiously bullish stance into the new year. One could consider buying call options with expiration dates in the first quarter of 2026 to capitalize on potential upward price movements while defining risk. Alternatively, bull call spreads could be used to lower the cost of entry if implied volatility seems elevated.
