During Monday’s Asian session, the gold price dipped as traders took profits following its surge to an all-time high. Gold retreated from nearly $4,550 during Asian trading, pressured by a stronger US Dollar, which affects non-US buyers. <\/p>\n
Despite this decline, gold has risen nearly 70% in 2025, marking its strongest annual gain since 1979. Expectations for US Federal Reserve interest rate cuts in 2026 could support gold by reducing the cost of holding the non-yielding asset, and geopolitical tensions could further boost demand. Trading might remain calm ahead of the New Year holidays, with the US Pending Home Sales report for November due later.<\/p>\n
US data showed weekly Initial Jobless Claims fell to 214,000, outperforming expectations. Meanwhile, President Trump mentioned progress in discussions with Ukrainian President Zelensky but no resolution on territory issues. Concerns persist regarding Federal Reserve independence following Trump’s expectations for the next Fed Chairman. Markets anticipate a roughly 18.3% chance of a rate cut in January.<\/p>\n
Gold remains above key technical levels, suggesting potential for further gains. However, its 14-day Relative Strength Index indicates overbought conditions, possibly leading to a consolidation phase. The price met resistance at $4,550, with support levels identified at $4,430, $4,338, and $4,300.<\/p>\n
Central banks, major gold holders, increased reserves by 1,136 tonnes in 2022, the highest on record. Gold’s inverse relationship with the US Dollar and US Treasuries positions it as a hedge during currency depreciation and inflation. Turbulent geopolitical or economic conditions often heighten gold’s appeal, while interest rates and dollar strength influence its price movements. Factors impacting gold pricing include geopolitical concerns, recession fears, and fluctuating interest rates.<\/p>\n
Given the profit-taking we are seeing today, December 29th, 2025, after gold touched its all-time high near $4,550, short-term caution is advised. Trading volumes are thin ahead of the New Year, which can lead to exaggerated price movements. It would be wise to avoid taking on large new positions until market participation returns to normal levels next week.<\/p>\n
The long-term outlook remains strongly positive, as gold has climbed nearly 70% this year. We’ve seen central banks continue this trend, with the World Gold Council’s Q3 2025 report confirming another 250 tonnes were added to official reserves. This underlying demand provides a solid floor for the market and supports the bullish case heading into 2026.<\/p>\n
The main driver for gold is the Federal Reserve’s expected shift in policy. With the final Q3 GDP revision coming in at a soft 1.9% and the latest November CPI data showing core inflation cooling to 2.8%, the path is clear for rate cuts next year. These factors reduce the appeal of holding dollar-denominated assets and lower the opportunity cost of holding non-yielding gold.<\/p>\n
Despite the positive trend, we must acknowledge the overbought signal from the 14-day RSI, which is above 70. This suggests the recent rally is overextended, and a period of consolidation or a deeper pullback is possible. Watching the initial support level at the December 23 low of $4,430 will be critical in the coming days.<\/p>\n
For those looking to position for the expected upside in early 2026, buying call options with February or March expiration dates could be a strategic move. This allows participation in a potential rally toward the $4,600 psychological level while limiting upfront capital risk. A dip toward the key support levels could present an ideal entry point for such a strategy.<\/p>\n
To manage risk on existing long positions, purchasing protective puts is a prudent measure. Given the overbought conditions and potential for a short-term correction, puts with a strike price near the December 17 low of $4,300 could hedge against a sudden downturn. This is especially relevant with the ongoing US-Ukraine peace talks, where a surprise breakthrough could temporarily reduce safe-haven demand.<\/p>\n
Another approach is to take advantage of potentially elevated volatility by selling out-of-the-money put options. This strategy allows for collecting premium, based on the view that the strong fundamental support from expected rate cuts will prevent a severe price collapse. This is a way to generate income while waiting for the next major move higher.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Gold dips from record highs as stronger US Dollar, profit-taking, and overbought signals prompt consolidation.<\/p>\n","protected":false},"author":62,"featured_media":16977,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-37779","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-ca\/wp-json\/wp\/v2\/posts\/37779","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=37779"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/37779\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16977"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=37779"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=37779"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=37779"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}