Insights 
VT 
Gold prices have climbed to approximately $4,210 during Thursday’s early Asian session. The upward movement is attributed to US-China trade tensions and expectations of another Federal Reserve interest rate cut.
The potential for a Federal Reserve rate cut could bolster gold due to its non-yielding nature, making it attractive as a safe-haven asset. The market is poised for a 25 basis points rate reduction at the October Fed meeting, with further cuts expected the following year.
Trade Tensions and Gold
Increased trade tensions between the US and China, alongside imposed port fees on shipping between the two countries, may further elevate gold prices. Any unexpected hawkish comments from the Federal Reserve could boost the US Dollar and hinder gold prices temporarily.
Gold serves as a safe-haven investment and a hedge against inflation. Central banks, especially from emerging economies, are major buyers, having added around 1,136 tonnes in 2022.
Gold often inversely correlates with the US Dollar and US Treasuries. It is affected by geopolitical unrest and economic fears, with lower interest rates typically boosting its attractiveness. A strong US Dollar can keep gold prices steady while a weaker Dollar might cause them to rise.
With gold trading near $4,210, the market is clearly driven by strong expectations of a Federal Reserve rate cut. We are looking for confirmation of this dovish stance from Fed speakers later today. Any hawkish surprise could create short-term volatility and pressure on the current price.
Monetary Policy Expectations
The expectation for easier monetary policy is supported by weakening economic data. The most recent Non-Farm Payrolls report from early October 2025 showed a gain of only 95,000 jobs, missing expectations and marking the third consecutive month of slowing employment growth. This follows Fed Chair Powell’s comments about a slowdown posing a growing risk to the economy.
Adding to the bullish sentiment are the renewed US-China trade tensions, with new port fees having just taken effect on October 14. Looking back, we saw during the 2018-2019 trade disputes how gold rallied as investors sought safety from market uncertainty and potential economic disruption. The current situation appears to be following a similar pattern, boosting gold’s safe-haven appeal.
We are also seeing relentless demand from central banks, which continues a trend we observed back in 2022 and 2023. Preliminary data for the third quarter of 2025 indicates that central banks added another 250 metric tons to their reserves globally. This consistent buying provides a strong underlying floor for the gold price.
For derivative traders, the environment suggests positioning for further upside while managing risk at these record highs. Buying call options, particularly on any price dips, offers a way to capture potential gains from expected rate cuts while limiting downside exposure to the premium paid. Implied volatility is elevated, reflecting the market’s anticipation of a significant move following the Fed meetings.
Another approach would be to use bull call spreads to reduce the high cost of options. This strategy involves buying a call and simultaneously selling a higher-strike call, which lowers the initial cost but also caps the potential profit. It is a suitable strategy for traders expecting a continued, steady climb rather than a dramatic price explosion.
