Gold Remains A Safe-Haven Asset
Prices are measured as follows: 1 gram at 43,773.67 PKR, 10 grams at 437,672.30 PKR, a tola at 510,584.80 PKR, and a troy ounce at 1,361,509.00 PKR. FXStreet calculates these prices by localising international rates and adjusts them daily.
Gold is traditionally used as a store of value and transaction medium. It is seen as a safe-haven asset and a hedge against inflation and currency depreciation, as it is not tied to any issuer or government.
Central banks hold Gold to support their currencies, with a record purchase of 1,136 tonnes in 2022. Emerging economies like China, India, and Turkey are increasing their reserves.
Gold prices often move inversely to the US Dollar and US Treasuries. They rise with geopolitical instability or recession fears and fall with higher interest rates. The price is influenced by USD behaviour as Gold is priced in dollars.
Current Market Dynamics
Given the current environment on January 21, 2026, we are looking at a supportive setup for gold prices. The market is increasingly pricing in interest rate cuts from the US Federal Reserve for the first half of this year, which lowers the appeal of holding yield-bearing assets like bonds. This makes gold, which offers no yield, a more attractive investment by comparison.
The US Dollar’s performance is a key factor, and its recent weakness is helping to lift gold. With the Dollar Index (DXY) currently trading around the 101 level, a significant drop from its highs over the past two years, gold becomes cheaper for holders of other currencies. We believe this trend of a softer dollar will continue as long as the market expects looser monetary policy.
We also see sustained demand for gold as a hedge against ongoing geopolitical instability and concerns about a slowdown in global economic growth. Major stock indices have been volatile recently, encouraging a flight to safety which benefits precious metals. This defensive positioning is likely to provide a solid floor for gold prices in the coming weeks.
Looking back, we remember the record-breaking gold purchases by central banks in 2022, and that trend has not stopped. Central banks, particularly in emerging markets, continued to add to their gold reserves throughout 2024 and 2025 as a way to diversify away from the US dollar. This consistent, large-scale buying creates a strong source of underlying demand that limits downside price risk.
For traders, this environment suggests that long positions in gold futures could be favorable. Buying call options with expiration dates in the next two to three months offers a way to participate in potential price increases while defining risk. We should watch for dips toward the $2,350 per ounce level as potential entry points for these strategies.
