Insights 
VT 
Gold Price Volatility
Throughout the Asian session, gold remains weak, as the US Dollar rises to its highest since August, driven by expectations of interest rate policy shifts. Economic uncertainties tied to the long government shutdown and global geopolitical concerns may support gold prices against further drops.
The technical position of gold suggests potential further declines, especially if the price drops below $3,963-3,952. Meanwhile, a rally above $4,000 might face resistance at regions like $4,025 and $4,045-4,046, with further movement possible towards $4,100.
The US Dollar showed strength across major currencies over the last 7 days, registering the strongest gain against the Swiss Franc at 1.72%. Key currency pairs, including EUR, GBP, and JPY, also experienced shifts, noting the Dollar’s overall elevated position in the market.
Given the hawkish Federal Reserve commentary, we see the US Dollar strengthening, which is putting pressure on gold prices. The Dollar Index (DXY) has recently pushed above 107.5, a high not seen since August 2025, reflecting this sentiment. This trend suggests that being short gold could be profitable as long as the market anticipates higher interest rates for longer.
Geopolitical Factors and Gold
However, the ongoing US government shutdown introduces significant uncertainty that could buffer gold from a steep decline. The current shutdown is about to become the longest in US history, threatening to surpass the 35-day record set back in the winter of 2018-2019. This kind of domestic instability often leads traders to seek safe-haven assets, which could limit gold’s downside.
Adding to the cautious sentiment are persistent geopolitical tensions, particularly with recent naval escalations in the Strait of Hormuz. These external risks provide a floor for the gold price, as any flare-up could trigger a flight to safety. Therefore, while the dollar is strong, the potential for a sudden gold rally remains.
