Gold prices held steady above the $4,000 level after reaching a record high of $4,059. This surge was driven by dovish Federal Reserve expectations and the ongoing US government shutdown, reinforcing demand for safe-haven assets.

As of writing, Gold is trading around $4,025, down by nearly 0.50% from the previous day. The rally in Gold is part of a broader trend in global markets, alongside rising US equities, Bitcoin, and the US Dollar.

Bullion Outlook and Market Trends

Bullion’s outlook remains positive, despite pullbacks possibly attracting dip-buying interest. Expectations of further Federal Reserve interest rate cuts this year are supporting Gold, with Treasury yields under pressure.

Persistent geopolitical and fiscal uncertainties, such as the prolonged US government shutdown and political changes in Europe and Japan, continue to bolster safe-haven demand. A recent US-brokered Gaza peace plan has eased some geopolitical tensions, though uncertainties linger.

The US government shutdown, now in its ninth day, is causing market uncertainty and slowing economic activities. Disruptions in economic data releases confound the Federal Reserve’s economic assessments.

Gold’s trend remains bullish, with key support levels at $4,000 and various moving averages providing further support. Central banks continue to increase their Gold reserves, influenced by its inverse correlation with the US Dollar and Treasuries.

Market Strategy Amid Uncertainty

Given the current market, we see the primary trend for gold as strongly bullish, supported by expectations of Federal Reserve rate cuts and persistent safe-haven demand from the US government shutdown. While the upward momentum appears stretched after hitting a new peak of $4,059, the fundamental drivers remain firmly in place. Our strategy should focus on participating in the uptrend while managing the risk of a short-term consolidation or pullback.

To add context to the Fed’s dovish stance, we should recall that the last available Core PCE inflation report for August 2025 showed a dip to 2.8%, nearing the central bank’s target range. Furthermore, the last jobs report before the shutdown indicated that nonfarm payrolls had slowed for the third consecutive month, adding only 95,000 jobs. These figures give credibility to officials like New York Fed President John Williams who are advocating for further rate cuts to support a softening labor market.

Considering the high RSI readings, we should avoid chasing the market at these record highs with leveraged futures positions. A more prudent approach is to use pullbacks to establish long positions through options, specifically by buying call options as the price dips toward the key psychological level of $4,000 or the 21-period SMA support around $3,992. This strategy provides us with upside exposure while clearly defining our maximum risk to the premium paid.

We have seen similar environments before, particularly during the initial phase of the Russia-Ukraine conflict in 2022 and the expansive monetary policy era of 2020, where geopolitical uncertainty and dovish central banks created a powerful tailwind for gold. Historically, these periods have rewarded buying on dips rather than selling into strength. This precedent reinforces our view that the current uptrend has further to run once any near-term exhaustion is worked off.

Given that the market uncertainty has likely elevated implied volatility, making call options more expensive, we could also implement bull call spreads. By simultaneously buying a call option and selling a higher-strike call, we can significantly reduce the net cost of our position. This is an effective way to trade a bullish outlook while mitigating the impact of high premiums in the current environment.

The government shutdown adds a significant layer of uncertainty, primarily by delaying crucial economic data like the upcoming CPI report. This lack of visibility complicates the Fed’s decision-making but also fuels the safe-haven narrative, creating a floor for gold prices. We must watch for any signs of a political breakthrough on a funding bill, as a resolution could trigger a rapid, albeit likely temporary, pullback in the gold price.

Finally, a sudden resolution to geopolitical tensions, such as a durable ceasefire agreement in Gaza, or an unexpected end to the government shutdown could cause a sharp reversal. To hedge against such a “risk-on” event, we should consider holding a small number of out-of-the-money put options. This acts as a cheap form of insurance that would protect our portfolio from a sudden drop in safe-haven demand.

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