Gold prices have surpassed the $3700 mark for the first time. The increase is attributed to strong US economic data and anticipation of the Federal Reserve’s policy decision. Retail sales and import prices exceeded expectations, while labour market softness indicates a potential 25bps rate cut, the first since December. Easing could continue into 2026.
Technically, gold’s August price lows found support near the 100-day moving average, reinforcing a bullish outlook. The $3452–$3500 zone broke on September 2, then retested and held, confirming the breakout. Following this, gold consolidated from its highs last week, allowing momentum to reset. This pause was advantageous, as buyers resumed activity, pushing prices to new all-time highs.
The Upward Trend
The upward trend continues into today’s session, suggesting confidence in further gains. Meanwhile, the US dollar is declining against all major currency pairs, with the most significant drop against USDCHF at -0.84%. The greenback is marginally down against AUD and NZD.
The market is pricing in a nearly 90% probability of a 25 basis point rate cut tomorrow, which would be the first since December 2024. We see this expectation as being driven by the soft August jobs report, which showed a gain of only 85,000 jobs. This labor market weakness gives the Federal Reserve cover to begin an easing cycle.
With gold breaking to new all-time highs above $3700, we believe buying call options is a clear strategy to capture further upside. The recent consolidation allowed momentum to reset, and this breakout looks strong. Traders should consider October or November expiration dates to give the trade time to develop.
We’ve also noticed implied volatility in gold options has climbed to 18.5, making naked long calls more expensive. For a more risk-defined approach, traders could use bull call spreads. This strategy would profit from a continued grind higher while capping the initial cost.
Opportunities In Futures Markets
The US dollar’s broad weakness presents another opportunity, particularly in futures markets. We are looking at shorting USD futures contracts, as the expected Fed cut contrasts with other central banks. The sharp drop in USDCHF is a prime example, especially after the Swiss National Bank hinted at holding rates steady last week.
Looking back at the easing cycle that began in mid-2019, gold rallied significantly as the Fed began cutting rates. We see a similar setup now, where falling real yields should provide a strong tailwind for precious metals. History suggests this initial move could have lasting momentum well into 2026.
