Trading activity in financial markets decreased on Tuesday as traders prepared for the New Year holiday. The US economic calendar included housing data and the release of the Federal Reserve’s December meeting minutes.<\/p>\n
The US Dollar remained unchanged, with the Dollar Index steady at around 98.00. The table showed the US Dollar weakened the most against the Australian Dollar, losing 2.44% this month. <\/p>\n
Pending Home Sales in the US increased by 3.3% in November, while the Dallas Fed Manufacturing Index fell to -10.9 in December. Gold and Silver experienced corrections on Monday, with Gold dropping over 4% and Silver falling about 9%. Both precious metals showed signs of recovery on Tuesday.<\/p>\n
The EUR\/USD and GBP\/USD pairs remained steady on Monday, with EUR\/USD above 1.1750 and GBP\/USD around 1.3500. The USD\/JPY dropped by over 0.3% on Monday and stayed at approximately 156.00 on Tuesday. <\/p>\n
Gold’s price is influenced by various factors, including geopolitical instability and interest rates. Central banks are major holders of Gold, with emerging economies like China and India significantly increasing their reserves. Gold is seen as a safe-haven and a hedge against inflation, inversely correlated with the US Dollar.<\/p>\n
With trading volumes thin for the holidays, we should not be lulled into complacency. The upcoming Federal Reserve Open Market Committee (FOMC) minutes are the most important event on the near-term horizon. These minutes will provide crucial insight into the Fed’s thinking on future rate cuts and could spark significant volatility.<\/p>\n
The US Dollar’s weakness this month is the dominant theme, falling against every major currency, especially the Australian Dollar. This follows a trend seen throughout 2025, as inflation has cooled significantly from the highs we saw a few years ago. With the US Core PCE Price Index falling to 2.5% year-over-year in the third quarter of 2025, the market has been pricing in a more dovish Federal Reserve for 2026.<\/p>\n
This environment suggests that selling USD call options or buying puts against a basket of currencies could be a prudent strategy. The dollar index holding steady around 98.00 feels more like a pause than a reversal. Any confirmation of a dovish stance in the minutes could easily push it toward the lows we witnessed earlier in the year.<\/p>\n
The explosive rally and subsequent sharp correction in gold and silver show just how nervous the market is. Gold’s inability to hold gains above $4,400 after such a powerful move suggests exhaustion, but the underlying support from central bank buying remains strong. We’ve seen this pattern of accumulation continue ever since central banks bought a record 1,136 tonnes back in 2022.<\/p>\n
Given the extreme price swings, outright directional bets on precious metals are risky. The high implied volatility makes option strategies like straddles or strangles attractive to trade the potential for another large move, regardless of direction. Selling covered calls against existing long positions could also be a way to generate income while waiting for the next clear trend to emerge.<\/p>\n
Pay close attention to the Japanese Yen, which has shown strength on a more hawkish Bank of Japan. With Japan’s core inflation holding above 2% for over a year now, policy is diverging sharply from the US. This fundamental backdrop supports a stronger yen against the dollar.<\/p>\n
The stability of USD\/JPY around 156.00 may offer a good entry point for bearish positions. We could consider buying puts on USD\/JPY, anticipating a break lower if the FOMC minutes confirm a path of easier policy in the US. This policy divergence is one of the clearest long-term themes heading into the new year.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Trading slowed ahead of New Year; gold, silver rebounded; US housing rose; dollar hovered, Aussie surged.<\/p>\n","protected":false},"author":62,"featured_media":16967,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-37910","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/37910","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=37910"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/37910\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16967"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=37910"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=37910"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=37910"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}