Insights 
VT 
Gold prices fell 1.7% to $4,250 per troy ounce on Friday, as stated by Commerzbank’s analyst, Carsten Fritsch. This decline followed US President Trump’s indication to negotiate on the additional 100% import tariffs on Chinese products, which he deemed unsustainable.
Prior to this, gold reached nearly $4,380, setting a new record high. The subsequent decline narrowed the weekly gain to 5.8%, with the last sharper increase occurring six months ago amid tariff conflicts.
Historic Weekly Surge
The weekly surge appeared strongest since the Lehman collapse in September 2008. Gold prices have risen over 60% this year, marking the highest annual increase since 1979, when geopolitical issues and high US inflation doubled the price.
The rise peaked in January 1980 at $850, unexceeded nominally until 2008. In real terms, using the US consumer price index, the 1980 peak is now also surpassed. This year is exceptionally notable for gold prices.
The FXStreet Insights Team comprises journalists who select market insights by experts and provide additional analysis. Their content features views from both commercial sources and internal or external analysts.
The recent pullback from a record high of nearly $4,380 to $4,250 per ounce shows just how sensitive the market is to geopolitical headlines. This extreme reactivity to statements on US-China tariffs means volatility will remain very high. For us, this suggests that options strategies that profit from big price swings, regardless of direction, could be advantageous.
Volatility and Investment Strategies
We just saw a weekly gain of 5.8%, confirming the intense volatility we are facing. Recent exchange data shows open interest in call options for the coming months has hit a multi-year high, suggesting many are still betting on further upside. This makes buying options spreads, like bull call or bear put spreads, a prudent way to manage the high premium costs while still taking a view on direction.
We cannot ignore that gold is up more than 60% since the beginning of the year, a rally not seen since the high-inflation era of 1979. This historic move is being supported by the latest economic data, which showed headline inflation holding at a stubborn 7.2% in September 2025, keeping demand for hard assets very strong. This fundamental pressure suggests that significant dips are likely to be viewed as buying opportunities.
Adding to the bullish case, we are seeing powerful institutional demand for gold. A report from last month indicated that central bank buying in the third quarter of 2025 was the highest on record, as many countries continue to diversify away from the dollar. This consistent buying provides a strong underlying floor for the price, which could cushion any politically driven sell-offs.
However, Friday’s sharp price drop is a clear warning that the market is also vulnerable to a swift reversal on any positive trade news. The immediate 1.7% decline on mere talk of negotiations means we must remain cautious. Therefore, holding some out-of-the-money put options could serve as a valuable and relatively cheap hedge against a sudden de-escalation in the trade dispute.
