Insights 
VT 
Gold prices dropped by 2% after reaching a record high of $4,379. This decline followed US President Donald Trump’s comments on the unsustainability of high tariffs on China, which improved risk appetite and increased US Treasury yields.
The US 10-year Treasury yield climbed nearly three basis points, putting pressure on non-yielding assets like gold. Meanwhile, the Federal Reserve remains committed to a 2% inflation target, and market participants await the Consumer Price Index release next week.
Us Dollar And Gold Prices
The US Dollar strengthened slightly, further dragging down gold prices. Despite this, gold has seen immense gains throughout the year, driven by geopolitical tensions and increased buying from central banks. Standard Chartered Bank forecasts gold to average $4,488 in 2026.
Technical outlook indicates a bullish trend for gold despite its recent dip. Resistance levels are at $4,300, $4,350, and $4,389, with support at $4,200. Central banks are key buyers of gold, adding substantial reserves to strengthen their currencies. Gold’s price is influenced by geopolitical instability, interest rates, and the US Dollar’s performance.
Yesterday’s 2% drop from a record high is a direct result of easing US-China tensions and rising Treasury yields. This has created a short-term headwind, pushing gold down from its peak near $4,380. For now, the path of least resistance appears to be lower as the US dollar finds some strength.
Given the uncertainty ahead of next week’s inflation data, we should consider buying put options to hedge our long-term holdings. A break below the $4,200 support level could trigger a faster move down toward the October 17th low of $4,185. This strategy protects us from a potential spike in yields if the inflation number comes in hotter than expected.
Price Stability And Market Trends
Recent data shows why the market is so focused on this upcoming Consumer Price Index (CPI) report. The September CPI report, released earlier this month, showed core inflation holding firm at 3.1% year-over-year, well above the Fed’s 2% target. This stickiness in prices complicates the Fed’s decision to cut rates as aggressively as the market expects.
Despite this pullback, the fundamental reasons for gold’s 62% surge in 2025 remain firmly in place. The trend of de-dollarization continues, with recent reports showing central banks, led by the People’s Bank of China, added another 250 tonnes to their reserves in the third quarter of 2025. This structural buying provides a strong floor for any significant price declines.
This dip should therefore be viewed as a potential buying opportunity for longer-dated call options. We can use the weakness to enter bullish positions at a better price, targeting strikes above $4,300. The underlying geopolitical risks and central bank demand have not disappeared overnight.
Looking back, we saw a similar pattern in 2023 when gold consolidated for months before breaking out. Even as the Federal Reserve held rates high during that period, persistent underlying demand eventually pushed prices to new records. This historical precedent suggests that patience will likely be rewarded once this current pullback stabilizes.
