Insights 
VT 
Gold Prices Set to Rise
Gold prices increased to nearly $4,165 in the early Asian session due to growing demand for safe-haven assets amidst US-China trade tensions. Federal Reserve officials’ speeches, including Stephen Miran and Christopher Waller, were anticipated later on Wednesday, potentially influencing market expectations regarding interest rates.
The US government’s plans for tariffs on Chinese goods and additional port fees are escalating the trade dispute, impacting global shipping and commodities. US Trade Representative Jamieson Greer mentioned potential tariffs of 100% on Chinese products, depending on Beijing’s responses.
The expectation of Federal Reserve interest rate cuts also contributes to Gold’s appeal. Markets predict a 25 basis points rate cut at the upcoming meeting, possibly followed by another reduction in December. Lower interest rates often benefit Gold due to decreased opportunity costs compared to non-yielding assets.
Central banks have increased Gold holdings, purchasing 1,136 tonnes in 2022, influenced by geopolitical uncertainties and economic strategies. Gold’s performance tends to be inversely correlated with the US Dollar and risk assets, reacting to shifts in currency value and interest rate policies.
Gold prices are susceptible to geopolitical stability, recession fears, and changes in the US Dollar’s value. A weaker Dollar tends to increase Gold’s price, while strengthening can suppress it, due to Gold being priced in dollars (XAU/USD).
Safe Haven Asset in Demand
With gold touching nearly $4,165, we are seeing clear safe-haven demand building ahead of major event risks. The primary drivers are renewed US-China trade tensions and strong expectations for a Federal Reserve rate cut later this month. The key is to position for continued upward momentum while managing the risk of sharp reversals from Fed commentary.
The threat of 100% tariffs by November 1st creates a specific deadline that should keep a bid under gold for the next few weeks. We are treating this as a serious catalyst for market uncertainty, especially with new shipping fees already taking effect. This geopolitical tension supports holding bullish positions as a hedge against escalating trade disputes.
The market is now almost certain of a rate cut in October, which is bullish for a non-yielding asset like gold. This view is supported by last week’s US inflation data, which showed the Consumer Price Index (CPI) remained stubbornly high at 3.8%, limiting the Fed’s ability to be hawkish. Lower interest rates decrease the opportunity cost of holding gold, making it more attractive.
For traders, this environment suggests implied volatility will rise, making options strategies particularly useful. We believe buying call options with November or December expirations is a prudent way to capture potential upside while limiting downside risk if Fed officials surprise with hawkish remarks. Selling out-of-the-money put spreads could also be used to collect premium based on the view that support for gold will remain strong.
This trend is reinforced by large-scale buying from official institutions, a pattern we have observed since the record-breaking central bank purchases back in 2022. Recent World Gold Council data for the third quarter of 2025 confirmed that central banks added another 280 tonnes to their reserves. This consistent demand from major players provides a strong underlying floor for the price.
The weakening US Dollar, which has dipped to its lowest level in three months, provides an additional tailwind for gold prices. We are also seeing significant capital flowing into gold-backed ETFs, with net inflows reaching over $4 billion since September 1st. This shows that both institutional and retail investors are increasing their exposure in anticipation of further gains.
