Insights 
VT 
Gold experienced a pullback after reaching an all-time high of $4,380 but remains above $4,300, marking an 8% weekly rally. An unusual mix of risk aversion and a weak US Dollar has driven up precious metals, as trade tensions between the US and China rise alongside concerns over a US shutdown and Federal Reserve easing signals.
Technically, Gold shows a stretched rally, often leading to a bearish correction, but risk-off sentiment and lower US Treasury yields maintain support. The Gold price holds above $4,300 with potential downside to $4,180, while resistance lies at $4,400, beyond which $4,455 becomes a target.
Gold as a Safe Haven
Gold serves as a safe-haven investment and hedge against inflation, with central banks being the largest buyers, recently acquiring 1,136 tonnes valued at $70 billion. The metal has an inverse correlation with the US Dollar and Treasuries, rising when the Dollar falls and providing diversification in volatile markets.
Gold prices fluctuate based on geopolitical tensions, recession fears, and interest rate changes, typically rising with lower rates. The US Dollar’s behaviour significantly impacts Gold’s price, as a strong Dollar can suppress it, while a weaker Dollar boosts it.
With gold pulling back from its all-time high of $4,380, the immediate reaction for those with long futures positions should be to consider taking partial profits. The market is technically overstretched after an 8% weekly surge, which often precedes a correction. However, the powerful underlying trends of US dollar weakness and risk aversion mean closing out entire positions could be premature.
The fundamental case for higher prices remains robust, driven by fears of an accelerating Fed easing cycle, especially after September’s CPI data for 2025 came in at a cool 2.8%. We believe using options is a prudent way to maintain bullish exposure while managing risk in this volatile environment. Buying call options with a strike price around $4,400 or higher allows traders to capture further upside from the escalating US-China trade tensions with a defined maximum loss.
Options Strategies for Managing Risk
On the other hand, the risk of a sharp pullback toward the $4,180 support level cannot be ignored. Traders looking to hedge their physical holdings or long futures should consider buying protective puts with a strike price near $4,250. This strategy provides a safety net against a sudden reversal in sentiment if the US government shutdown, now entering its third week, shows signs of a resolution.
Given the extreme uncertainty, a volatility-focused strategy may be the most logical approach for some. The current environment is ripe for a large, sharp move, but the direction is unclear. A long straddle, involving the purchase of both a call and a put option with the same strike price and expiry, would profit from a significant price swing in either direction over the coming weeks.
We have seen this pattern before, particularly during the rally that broke through $2,400 back in 2024, where shallow dips were aggressively bought. This persistent demand is underpinned by relentless central bank buying, a trend that has only accelerated since the record purchases we witnessed in 2022 and 2023. According to the most recent World Gold Council data from Q2 2025, emerging market banks, particularly China’s, continue to add to their reserves, creating a solid floor for the price.
