Insights 
VT 
The price of gold fell during the North American session on Thursday, dropping from a peak of $4,058 to below $4,000, as the US Dollar strengthened. Gold traded at $3,978, marking a 1.5% decrease.
Traders booked profits, causing the price to dip to $3,944, coinciding with Chinese traders returning from holidays. A positive sentiment emerged from news of a potential permanent ceasefire between Israel and Hamas, despite the ongoing Russia-Ukraine conflict.
The US Government Shutdown Update
The US government shutdown reached its ninth day, and Federal Reserve minutes showed support for a weakening labour market. Fed Governor Michael Barr expressed uncertainty about inflation and the jobs market.
The US Dollar Index increased by 0.62% to 99.42, with US Treasury yields rising as the 10-year note reached 4.148%. Goldman Sachs revised its 2026 gold price forecast from $4,300 to $4,900, reflecting strong ETF flows and central bank demand.
Market predictions suggest a 94% probability of a 25 basis point interest rate cut by the Federal Reserve in their October meeting. Gold’s technical outlook reveals potential tests of new highs if it surpasses the $4,000 mark. Conversely, a fall below $3,950 may lead to further decline.
Yesterday’s retreat from the record high of $4,058 is a classic case of profit-taking, accelerated by a stronger US dollar and news of a ceasefire between Israel and Hamas. This dip below $4,000 should be viewed as a potential entry point rather than a change in the overall trend. The market is simply catching its breath after a significant rally.
Traders Strategy Amidst Gold Volatility
The ongoing US government shutdown, now in its ninth day, provides a strong fundamental reason to remain bullish on gold. Looking back at similar events, we saw gold rally over 4% during the extended 35-day shutdown in late 2018 and early 2019. This historical precedent suggests the political uncertainty will continue to fuel safe-haven demand.
We see the Federal Reserve as the primary catalyst for the next move up. With the market pricing in a 94% probability of a rate cut on October 29, any short-term weakness in gold is likely limited. This expectation is solidified by recent labor statistics showing a clear cooling in the US jobs market through the third quarter of 2025, directly aligning with the Fed’s stated concerns.
The current conflict for traders is the strong US dollar and rising yields, which are acting as a short-term anchor on the price. This creates an environment where gold is being pulled between immediate monetary pressures and underlying geopolitical and economic risks. This tension is ideal for traders who thrive on volatility.
For the coming weeks, we believe using options is the most prudent approach. Buying call options with strike prices above $4,100 for expirations in November allows traders to capitalize on a post-Fed meeting rally while defining their risk. Selling cash-secured puts with a strike near the $3,800 support level is another viable strategy to generate income or acquire the metal at a discount.
The bigger picture continues to be dominated by institutional demand. World Gold Council data showed that central banks continued their historic buying spree through 2024 and the first half of 2025. This relentless accumulation provides a strong underlying floor for the market, mitigating the risk of a more severe correction.
