Insights 
VT 
Gold Prices Face Pressure
Gold prices rose by over 2% on Monday, recovering losses from the previous Friday due to expectations that the Federal Reserve will continue its easing cycle next week. The softer US Dollar and declining US Treasury yields allow gold to trade at $4,345 after it touched a daily low of $4,219.
US President Donald Trump’s comments on China did not sustain the gold uptrend amid limited economic activity in the US. The ongoing US government shutdown entered its twentieth day without signs of reopening. The US Bureau of Labor Statistics is set to release the US Consumer Price Index (CPI) for September this week, which is critical as the Federal Reserve prepares to announce its monetary policy decisions next week.
Markets have factored in a 96% likelihood of a US central bank rate cut and a 50-basis-point reduction for 2025. Trade discussions between the US and China are to continue in Malaysia, ahead of the November 10 trade truce deadline.
Gold prices face pressure due to a US Dollar recovery. The US Dollar Index fell by 0.06% to 98.60, with 10-year Treasury yields down two basis points at 3.991%. Also, US real yields, inversely related to gold prices, stand steady at 1.723%, down nearly two basis points.
Besides the CPI figures, traders will monitor S&P Global PMI data for October. Geopolitical tensions, including resumed Israel-Hamas hostilities, influence gold price movements. The US Senate will decide on government reopening as it resumes.
Geopolitical Tensions and Global Economic Impact
Gold has surged over 62% in 2025, driven by geopolitical tensions, central bank purchases, and de-dollarization trends. Inflows into Gold ETFs have supported this rise, with prices shifting from a yearly opening of $2,623.
Gold’s upward trend continues, though hesitance exists around reaching $4,350. A close above this level could pave the way to test historic highs and $4,400 and $4,500 figures. Conversely, a drop below $4,200 could lead to further price challenges.
Gold remains a vital economic asset, historically valued as a store of value and medium of exchange. Besides jewellery, it is a safe haven and hedge against inflation and currency depreciation. Central banks are major holders, using gold to bolster economic trust.
In 2022, central banks purchased 1,136 tonnes worth approximately $70 billion, the highest annual acquisition. Emerging economies, including China, India, and Turkey, are notably increasing their gold reserves.
Gold is inversely related to the US Dollar and US Treasuries, affecting its appeal during dollar depreciation. Geopolitical unrest or recession fears can spur gold price increases due to its safe-haven appeal. Conversely, higher interest rates can weigh on the asset. Its price fluctuations often correlate with dollar valuation, with a weak dollar potentially driving gold prices higher.
Given the high probability of a Federal Reserve rate cut next week, we believe the path of least resistance for gold is upward. Markets are currently pricing in a 96% chance of a cut, which is weakening the US Dollar and pushing bond yields lower. This environment is highly supportive for a non-yielding asset like gold.
The expectation for looser monetary policy is supported by recent inflation data, which shows a cooling trend. For instance, the August 2025 Consumer Price Index (CPI) came in at 3.4%, reinforcing the idea that the Fed has room to ease without reigniting price pressures. We saw a similar dynamic in late 2019, when Fed easing cycles preceded a strong multi-month rally in precious metals.
Uncertainty from the ongoing US government shutdown and renewed hostilities in the Gaza Strip are fueling a flight to safety. This is evident in recent fund flows, as data from September 2025 showed over $5 billion in net inflows into gold-backed ETFs. This investor demand provides a strong floor for prices during any potential pullbacks.
Beyond short-term events, the sustained de-dollarization trend continues to be a major tailwind for gold. The World Gold Council’s latest report confirmed that central banks purchased another 250 tonnes in the third quarter of 2025, marking the ninth consecutive quarter of historically strong buying. This institutional demand is a key reason gold has appreciated over 60% this year.
For bullish traders, buying call options with strike prices above the all-time high of $4,379, such as the $4,400 or $4,450 strikes, could be an effective way to play a breakout. These options offer leveraged upside if the Fed confirms its dovish stance next week. The relatively low implied volatility ahead of the announcement may present a valuable entry point.
Conversely, those holding physical gold or long futures positions may consider buying put options to hedge against a surprise hawkish outcome or a sudden resolution to the US-China trade talks. A put option with a strike price below the key $4,200 support level could offer protection against a sharp, albeit unlikely, downturn. This strategy allows for continued participation in the upside while defining downside risk.
Given the number of market-moving events this week, including the CPI release and PMI data, an increase in volatility is expected. Traders who anticipate a large price move but are unsure of the direction could implement a long straddle. This involves buying both a call and a put option with the same strike price and expiration, profiting from a significant price swing either up or down.
