Insights 
VT 
Gold’s Stability Amid Geopolitical Tensions
High-level trade talks between the US and China are set to commence with US export restrictions being considered. The US has imposed new sanctions on Russia targeting major energy companies, aiming to reduce Moscow’s oil revenue. These sanctions follow a cancelled summit between US President Donald Trump and Russian President Vladimir Putin.
Gold trades within a confined range of $4,000 to $4,150, awaiting new triggers such as the US CPI report for directional movement. The $4,000 level acts as key support, while $4,150 serves as immediate resistance. Despite a bearish bias, the market shows active buying at lower levels, indicating a possible prolonged consolidation phase.
We see gold consolidating in a tight range around $4,150 as the market holds its breath. The major catalyst we are all watching is the US CPI inflation report due tomorrow, which will heavily influence the Federal Reserve’s next move. This data will be critical for determining gold’s next directional leg.
The market is currently pricing in a high probability of a rate cut at the FOMC meeting next week. Data from the CME FedWatch Tool this morning shows a 75% chance of a 25-basis-point cut, but a hot CPI number could easily disrupt those expectations. We need to be prepared for a sharp repricing if inflation comes in above the forecasted 3.8%.
Lessons From 2023
This environment feels familiar to the uncertainty we navigated back in 2023, when high inflation clashed with geopolitical stress. Back then, the Fed’s aggressive rate hikes temporarily capped gold’s upside despite the ongoing conflict in Ukraine. It serves as a reminder that central bank policy can be a powerful headwind, even in a risk-off market.
Geopolitical tensions are adding a strong floor under the price, preventing a significant sell-off. The US-China trade talks beginning in Malaysia are a key focus, especially with the threat of new US export controls on sensitive technology like AI chips. Any negative headlines from these discussions could quickly send capital flowing into safe-haven assets like gold.
Furthermore, the new US sanctions against Russian energy giants have already caused a stir in the commodity markets. We saw WTI crude oil futures jump over 4% this week to settle above $92 a barrel, which can feed into inflation fears and further support gold. The sharp rhetoric from former Russian President Medvedev underscores the heightened risk of escalation.
For derivative traders, this pre-CPI environment suggests playing volatility rather than direction. Buying straddles or strangles with expirations in early November could be an effective way to position for a large price swing in either direction following the data release. This strategy profits from a breakout without needing to predict its direction.
Those trading futures should remain cautious inside the current $4,000 to $4,150 range. We are looking for a decisive close above the $4,200 resistance to confirm bullish momentum, or a break below the psychological $4,000 support to signal a deeper correction. Until one of these levels is breached, scalping within the range with tight stops is the more prudent approach.
