Gold’s price has faced hurdles in breaking above the $4,000 mark, struggling to confirm beyond the $4,030-$4,040 resistance range. The appreciation of US Treasury yields and a stronger US Dollar, supported by reduced expectations of Federal Reserve interest-rate cuts, has weighed down precious metals.

On Thursday, gold showed a mild recovery, but could not reinforce gains past $4,030 as higher yields and a firm Dollar acted as barriers. The failure to break past key resistance might leave the $3,900 support level vulnerable, with prices hovering around $3,920 at the last check.

Technical Indicators Signal Mixed Outlook

Technical indicators such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) reflect mixed signals. A break above $4,040 could alleviate bearish pressures, pointing towards targets like $4,150 and $4,220. Conversely, a drop below $3,890 could see declines towards $3,820.

Central banks are the largest holders of gold, buying 1,136 tonnes worth around $70 billion in 2022. Gold generally has inverse correlations with the US Dollar and Treasuries and acts as a hedge against economic uncertainty, geopolitical events, and inflation. Its price is influenced by numerous factors including interest rates and USD movements.

Gold is currently stuck in a tight range, struggling to hold its ground above the significant $4,000 level. We see strong resistance around $4,030-$4,040, while any weakness finds initial support near $3,900. This sideways movement is a direct result of a stronger US Dollar and rising Treasury yields.

The Federal Reserve’s recent signals against further rate cuts this year are the main driver for this pressure. Recent government data shows core inflation for September 2025 ticked up slightly to 3.1%, justifying the Fed’s cautious stance and pushing the Dollar Index (DXY) to a three-month high of 107.50. With the 10-year Treasury yield now firm above 4.12%, the environment is challenging for non-yielding assets like gold.

Trading Strategies Amid Stagnant Prices

Given this backdrop, options traders might consider strategies that benefit from either a breakdown or continued stagnation. Buying put options with strike prices below the $3,900 support could be a way to hedge against a drop toward the $3,820 target. Alternatively, selling covered calls above the $4,040 resistance could generate income while gold remains range-bound.

The lack of clear directional momentum, as shown by mixed technical indicators, also suggests that volatility could be mispriced. With the Relative Strength Index hovering around the 50-midpoint, implied volatility in gold options has been declining. This may present an opportunity to buy straddles or strangles around the $4,000 level, positioning for a sharp price move once this consolidation period ends.

However, we must remember the significant underlying demand from global central banks, which continues to provide a long-term floor for the price. The World Gold Council’s data for the third quarter of 2025 showed central banks added another 250 tonnes to their reserves, continuing the trend of diversification away from the US Dollar. This fundamental support suggests that any sharp sell-off could be met with significant buying interest.

We saw a similar dynamic back in the 2022-2023 period, where an aggressive Federal Reserve kept gold prices under pressure despite high inflation. Eventually, the market shifted its focus back to geopolitical risks and long-term debt sustainability, which propelled gold to new highs. This historical precedent suggests that while the short-term outlook is tied to interest rate expectations, the long-term case for gold remains intact.

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