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Gold as a Safe Haven
Gold is valued historically as a store of value and exchange medium. It is deemed a safe-haven asset during turbulent times, also serving as a hedge against inflation and currency depreciation.
Central banks are the largest holders of gold, adding 1,136 tonnes in 2022. They diversify their reserves to improve economic strength perception, with China, India, and Turkey significantly increasing their reserves.
Gold’s value often inversely correlates with the US Dollar and US Treasuries. Economic instability can drive its price, as can lower interest rates. It typically rises when the dollar is weaker, while a strong Dollar can suppress its price.
We are seeing gold prices dip slightly today, October 23, 2025, which reflects the asset’s inverse relationship with a strengthening US dollar. Recent commentary from the US Federal Reserve hinting at holding interest rates firm has boosted the dollar, making gold more expensive in other currencies. This short-term pressure presents a potential entry point for traders considering future market volatility.
Gold Market Strategy
As a non-yielding asset, gold’s appeal lessens when interest rates are high, a lesson we clearly saw during the aggressive rate-hike cycle of 2022-2024. US Treasury yields have ticked up to 4.3% this past week, drawing capital away from precious metals. Traders should watch these yields closely, as any sign of them peaking could signal a reversal for gold.
Despite this, the underlying demand from central banks provides a strong floor under the price. Building on the record purchases we witnessed back in 2022, central banks in emerging markets have already added over 750 tonnes to their reserves year-to-date in 2025. This consistent buying suggests that major global players see long-term value and are hedging against currency depreciation.
The current price weakness is also linked to a temporary easing of geopolitical tensions following recent diplomatic talks. However, we know this stability can be fragile, and any flare-up could send investors rushing back to gold’s safe-haven status. A look back at the market reactions to global conflicts over the past five years confirms how quickly gold can rally on news of instability.
Given the strong dollar headwinds but solid long-term support, traders might consider buying long-dated call options. This strategy allows for capitalizing on a potential future price surge driven by a Fed policy shift or geopolitical event, while limiting downside risk in the current high-rate environment. The slight price dip offers a more attractive premium for these positions.
