Insights 
VT 
Gold is stable just below $4,000 as traders consider the Federal Reserve’s interest rate decisions and recent US-China dialogue. The Fed cut rates by 25 basis points, now ranging from 3.75% to 4.00%, with some members disagreeing on the approach. Technically, gold faces resistance near $4,020 and support at around $3,900.
Gold reached $3,980 after a volatile session, marking a 1.20% daily increase. Powell’s comments following the rate cut left future reductions in doubt. Consequently, dollar and Treasury yields received a boost. Expectations for another rate cut in December have decreased due to these remarks.
Recent US China Negotiations
Recent US-China negotiations resulted in a one-year trade truce, reducing tariffs and resuming US imports. China agreed to continue exporting crucial materials, while economic activities show contradictions. The Fed plans to halt its securities reduction program in December, affecting its balance sheet strategy.
Powell highlighted the challenges of addressing both inflation and employment simultaneously. The World Gold Council reported a 3% rise in gold demand annually. With central banks adding reserves, increased investment demand showed an upward trend of 47%.
Technically, gold remains pressured but stable beneath $4,000, with potential for improvement if resistance is overcome. As a traditional safe haven against economic uncertainties, gold’s prices are sensitive to geopolitical and economic shifts, with its outlook remaining cautious yet attentive.
The Federal Reserve’s recent rate cut was expected, but the cautious message from Jerome Powell has put a cap on gold’s rally. We see this as a classic “hawkish cut,” where the action is dovish but the forward guidance is not, strengthening the US Dollar for now. This explains why gold is struggling to hold gains above the critical $4,000 level.
Economic Data and Market Reaction
With the last Non-Farm Payrolls report in early October 2025 showing a disappointing 95,000 new jobs, the slowing labor market is a real concern. However, September’s core CPI data came in at a stubborn 4.2%, which is why the Fed is hesitant to signal more cuts. This stagflationary environment, reminiscent of what we saw building in 2023, is creating significant uncertainty for the December meeting.
For derivative traders, this uncertainty is an opportunity to focus on volatility rather than direction. The implied volatility on gold options, as seen in the elevated CBOE Gold Volatility Index (GVZ), is pricing in a significant move before year-end. We believe strategies like long straddles or strangles, which profit from a large price swing in either direction, are prudent as the market digests these conflicting signals.
The new one-year trade truce with China is temporarily reducing gold’s appeal as a geopolitical hedge. This deal, which lowers tariffs from about 57% to 47%, has eased some market fears. However, the ongoing US government shutdown provides a layer of domestic risk that should keep a floor under the price.
We must not ignore the strong underlying support from central banks, which have added 220 tonnes to their reserves recently. The announced end of Quantitative Tightening on December 1st will also add liquidity to the system, which is fundamentally supportive for non-yielding assets. This suggests that the $3,900 support level will likely attract significant buying interest on any further dips.
In the coming weeks, we are looking at options to define our risk around the $3,900 to $4,020 range. A trader could consider buying call options with a strike price above $4,020 to play a potential breakout driven by a dovish shift from the Fed. Conversely, buying puts below $3,900 would be a way to hedge against a stronger dollar if inflation data remains hot.
