Gold Price has risen to around $3,350 in Monday’s early Asian session, marking an increase of 0.80% on the day. Uncertainty surrounding US President Donald Trump’s tariff policies continues to support the price of Gold.
The precious metal has gained more than 25% since January due to economic concerns and geopolitical tensions. Central banks, particularly China, have added gold to their reserves, reflecting ongoing demand for this safe-haven asset.
The Federal Reserve’s Stance
The Federal Reserve’s hawkish stance, with no immediate interest rate cuts, may affect Gold’s appeal. This could support the US Dollar, potentially impacting Gold prices, which are typically priced in USD.
Gold serves as a widely recognised store of value and is considered a hedge against inflation and currency depreciation. Central banks remain the largest holders of Gold, adding 1,136 tonnes in 2022, valuing around $70 billion.
Gold prices often react inversely to the US Dollar and Treasury yields. Geopolitical instability and financial market volatility can drive demand for Gold due to its safe-haven status. Interest rate fluctuations also play a role in Gold’s market value.
Given the current trajectory in precious metals, particularly with gold holding above the $3,300 mark and extending its upward momentum as Asia begins the week, we’re seeing a noticeable shift in risk perception. This 0.80% increase early Monday, though modest in isolation, points to a broader pattern that’s been building since January. The metal has climbed over 25% during that time, which, in real terms, reflects how enduring unease around trade policy, inflation expectations, and wider macroeconomic fragility is beginning to weigh heavily on sentiment.
From a macro perspective, tariff policies coming out of Washington are once again stirring tension. While the attention is primarily focused on leadership positions within the US government, the potential economic ramifications are now carrying more weight in market dynamics than quotes or political theatre. That’s important, because pricing of options and futures may soon account for potential policy shifts. What we must watch closely, then, is not only tariff announcements themselves, but positioning activity ahead of major political events.
Add to this the role of central banks, particularly from Asia, in accumulating metal reserves, and the signal becomes much harder to ignore. We’ve not forgotten that over a thousand tonnes were added to official holdings in just one year. Those were not merely symbolic purchases. When the largest institutional holders are increasing exposure, there is information in those choices. It reflects not only diversification, but a lack of trust—or at least uncertainty—in the stability of fiat systems globally.
Market reactions to policy cues from Washington continue to favour the dollar in moments of confidence in monetary tightening. The Federal Reserve’s posture has not yet turned dovish, and any delay in a downshift on interest rates tends to make USD-denominated commodities, like gold, relatively higher in cost. Yet, rather than posing a simple headwind, past weeks have shown this relationship working with a lag, as inflation-adjusted returns are now being weighed more carefully.
Market Dynamics and Risk Management
It follows that even if we see yield curves steepen or moderate temporarily, the underlying support for bullion may persist—especially if inflation metrics appear above forecasts. This renewed interest isn’t only a play on fear, but increasingly rational portfolio balancing where traditional instruments are either yielding less or proving more volatile.
We must be conscious of scenarios that drive demand for defensive positioning. Of course, central bank buying and retail flows reflect differing motivations, but they aggregate towards price pressure. What makes this moment more delicate is the combination of financial tightening and political brinkmanship, both of which layer unpredictability onto an already complex pricing mechanism.
While the recent rally has been impressive, we need to consider the potential for profit-taking or short-term selling, particularly if yields surge or geopolitical temperature drops somewhat. Moves in the Treasury market are still the fastest lever to suppress speculative upside in gold, so charts showing rising yields must be watched carefully—not just the levels, but the speed at which they adjust.
All of this creates compression in options markets. Implied volatility has been rising, though not uniformly. We’ve noted certain expiry dates showing higher skew than others, suggesting tactical preferences among calendar spreads and straddle formations. The pricing tells us that few are expecting a linear path forward—market-makers are starting to hedge longer-term variance, rather than sharp spikes.
In practical terms, responses need to be adjusted. Derivatives built on short-term predictability are becoming less suited to these conditions. Instead of chasing tops, strategies that favour measured entries, low delta exposure, and more convex payoffs are gaining appeal. This climate doesn’t reward overconfidence, but rather deliberate risk adjustment as the global financial backdrop wrestles with both policy rigidity and political distraction.
With allocations visibly in transition and monetary tightening far from uniform across major economies, hedged positions in metals are less about speculation now and more about prudent weighting. Watching correlations with real yields, currency baskets, and even oil becomes a matter of necessity rather than curiosity. The path forward demands precision—but more than that, it demands patience.
