The United States core Personal Consumption Expenditures – Price Index has decreased from its previous rate of 2.8% to 2.7% in October. This metric, a key indicator of consumer price trends, reflects changing costs in goods and services excluding food and energy costs.
Gold has reached record highs, surpassing the $4,900 mark per troy ounce recently. This surge comes amid a decline in the US Dollar, although global risk sentiment appears to be improving.
Crypto Market Volatility
Crypto markets are experiencing volatility with Bitcoin slightly above $90,000. However, Exchange-Traded Fund selling pressure continues, impacting Bitcoin and other cryptocurrencies like Ethereum, trading around $3,000.
In foreign exchange, the EUR/USD has consolidated near 1.1750, leveraging eased US-EU trade tensions and a softer US Dollar. Meanwhile, GBP/USD is ascending towards the 1.3500 mark, supported by selling pressure on the Greenback.
Amid these market activities, former President Donald Trump has withdrawn proposed NATO tariffs. This move signals a reduction in previous escalation fears associated with the Greenland dispute.
The cooling Core PCE data from back in October 2025, which came in at 2.7%, continues to drive market sentiment. We believe the Federal Reserve will be pressured to hold interest rates steady, a view supported by current Fed funds futures pricing. Data from the CME Group suggests the market is pricing in a greater than 85% chance of no changes at the next meeting.
US Dollar and Interest Rate Outlook
This outlook is keeping the US Dollar weak, which we see as a continuing trend in the coming weeks. We are looking at buying call options on currency pairs like EUR/USD and GBP/USD to capture further upside while limiting our risk. We saw a similar pattern in late 2023 when the Dollar Index (DXY) fell nearly 5% in two months as rate hike expectations faded completely.
Gold’s rally to nearly $4,900 is impressive, but it seems tied more to the weak dollar than to genuine fear in the market. This makes the metal vulnerable to a dollar rebound, so we are considering using covered calls on gold futures to generate income while holding our long positions. This strategy allows us to profit if gold stays flat or rises moderately.
With the recent de-escalation of US-EU trade tensions over Greenland, implied volatility has fallen. The CBOE Volatility Index (VIX) is currently trading near 13.5, which is historically low and makes buying protective put options on the S&P 500 an inexpensive way to hedge against an unexpected shock. We remember that periods of low volatility, like we saw for much of 2017, do not last forever.
In the crypto space, the selling pressure on Bitcoin ETFs near the $90,000 level suggests major players are taking profits. This signals potential short-term weakness or, at best, a period of consolidation for the asset. This makes strategies like a bear call spread on Bitcoin futures attractive for those anticipating a pullback toward the $85,000 level.
