Gold prices have surged beyond $3,600, achieving record highs amid ongoing market momentum. This surge defies the typically sluggish September trends, as gold benefits from a confluence of favourable factors.
The continuation of gold’s upward trend began last year, with current conditions showing no signs of slowing down. September’s typical softness is countered by new narratives linked to shifts in Federal Reserve pricing based on US data. This week’s anticipated Consumer Price Index report could further impact gold’s trajectory.
Global And Domestic Factors Affecting Gold
Global and domestic factors are supporting gold prices, making a sudden change in market sentiment unlikely. Key influences include potential Federal Reserve easing, central bank purchases, ETF activities, dollar weakness, and stagflation threats. These elements provide solid grounds for sustained support of the metal.
As December and January approach, historically strong months for gold, attention focuses on their impact on current trends. Buying on price dips remains a common strategy for traders. For now, the primary focus remains on capitalising on the present upward trend in the gold market.
With gold now firmly above $3,600, the clear signal for us is to maintain a bullish bias. The momentum we’ve seen since the breakout from the late-August consolidation range suggests buying call options or call spreads is a direct way to ride this trend. This upward drive is shrugging off the usual September weakness, indicating a stronger underlying force is at play.
The rally is largely fueled by expectations of Federal Reserve easing, which have only intensified after last week’s non-farm payrolls report came in at a weaker-than-expected 95,000. We’ve seen CME FedWatch probabilities for a November rate cut jump to over 70% following that data. This continued pressure on the US dollar, which is testing its yearly lows, provides a significant tailwind for the metal.
Strategic Market Movements And Data Releases
We are also seeing strong physical demand, as central banks were reported to have added another 55 tonnes to their reserves in August. At the same time, gold-backed ETFs have just posted their largest weekly inflow since the second quarter, pulling in over $2.5 billion. Traders should watch this Thursday’s CPI report closely, as a surprise to the upside in inflation could trigger a pullback.
Given the market’s “buy the dip” mentality, any correction is likely to be met with strong buying interest. Selling out-of-the-money puts is one strategy to consider, as it allows us to either collect premium if gold continues to rise or enter a long position at a lower price. This is especially relevant after we witnessed the long consolidation period from May to August 2025, which built a strong base for the current move.
The current strength is notable as we head towards the historically positive seasonal period for gold in December and January. For now, the technical breakout is supported by the macro narrative of stagflation risks and central bank policy. The immediate strategy should be to run with the upside momentum while managing risk around key data releases.
