Insights 
VT 
Gold (XAU/USD) recovered from a dip to the $4,280-4,279 region and approached a near all-time high close to $4,350, maintaining its track for a nine-week gain streak. Economic uncertainty, including US-China trade tensions and a prolonged US government shutdown, bolstered safe-haven demand.
Additionally, expectations of two further US Federal Reserve rate cuts this year have supported Gold’s appeal. A weaker US Dollar has contributed to Gold’s upward momentum, although short-term charts indicate overbought conditions. Yet, the trend suggests further gains for the bullion.
Us China Tensions
US-China tensions escalated with tariff threats and reciprocal port fees, increasing fears of a trade war. The ongoing US government shutdown added to safe-haven demand for Gold. Geopolitical concerns intensified as Russia launched strikes in Ukraine, while diplomatic efforts between Trump and Putin were underway.
Fed Chair Powell’s recent remarks suggested dovish monetary policy, supporting traders’ expectations of rate cuts. This has pressured the US Dollar. Market participants seem confident of an interest rate cut at upcoming Fed meetings, which underlies the continued strength in Gold prices.
Gold’s Relative Strength Index remains high, signaling potential for profit-taking. However, support levels around $4,280-$4,235 may keep declines in check. Breaks above $4,379-$4,400 could further intensify bullish trends.
Given that gold is trading near its all-time high of $4,350, the primary strategy for the coming weeks should be to trade with the prevailing upward trend. The fundamental drivers, including geopolitical tensions and a weak US dollar, are strong and show no signs of easing. Using call options can allow traders to participate in further gains while clearly defining their maximum risk.
Federal Reserve Rate Cuts
The expectation for two more Federal Reserve rate cuts this year is providing significant fuel for this rally. We saw a similar dynamic back in the first half of 2024, when the anticipation of looser monetary policy sent gold breaking past previous records. With the latest September Consumer Price Index (CPI) data from 2025 showing inflation holding steady at 2.5%, the Fed has a clear path to continue easing policy.
Central bank buying also remains a powerful force, providing a solid floor for the price. Reports from the World Gold Council for the third quarter of 2025 showed that global central banks added another 250 tonnes to their reserves, continuing the aggressive purchasing trend we have witnessed since 2022. This persistent institutional demand should limit the severity of any potential price corrections.
However, we must respect the warning signs from technical indicators, as the daily Relative Strength Index (RSI) is in extremely overbought territory. This suggests that a sharp, corrective pullback is becoming more likely as traders look to take profits off the table. A prudent approach would be to purchase out-of-the-money put options to hedge long positions against a sudden drop below the $4,200 level.
For traders anticipating a significant price move but unsure of the direction, the tension between bullish fundamentals and overbought technicals creates an opportunity for volatility strategies. Implementing a long straddle, which involves buying both a call and a put option at the same strike price, could prove profitable if gold makes a sharp move in either direction. This is a way to trade the likelihood of a breakout or a breakdown from these historically high levels.
