Gold markets continue to react to the recent Fed decision, with European traders pulling back from overnight actions. Currently, market participants seem to maintain their existing positions, awaiting further US economic data, such as the weekly initial jobless claims.

Earlier, gold prices fell to $3,634, briefly dipping below the 100 and 200-hour moving averages for the first time in four weeks. However, this drop appears to be a false breakout, as prices have climbed back above these levels, indicating a regained short-term control by buyers.

The Fed Decision And Gold Market Reaction

While the Fed’s decision was not particularly dovish, it aligns well with existing market expectations. The broader perspective remains steady unless upcoming US economic data suggests a change.

Historically, once the Fed initiates easing monetary policy, it often continues this trend. This could potentially drive gold prices higher, with some predictions suggesting a rise to $4,000. A short-term pullback in prices could still occur before the traditionally stronger months of December and January.

Following the Fed’s decision on September 17th, we saw gold dip below its key near-term moving averages, but buyers quickly rejected that move. This price action suggests the market sees the dip as a buying opportunity, not a change in the overall trend. The immediate focus is now on how we react to the upcoming US weekly jobless claims data later today.

The bigger picture remains unchanged because the Fed’s policy easing aligns with recent economic signals. The last Non-Farm Payrolls report for August 2025 showed job growth slowing to 155,000, underscoring the case for a more supportive monetary policy. This backdrop should continue to favour assets like gold, which tend to perform well in lower-rate environments.

Market Strategies And Seasonal Trends

We should remember that when the Fed begins an easing cycle, it tends to continue for some time. Looking back at the cycle that started in mid-2019, the Fed cut rates three times in a row, which helped push gold prices significantly higher over the following year. History suggests this current easing phase has more room to run.

With many analysts now targeting $4,000, traders could look at buying call options expiring in December 2025 or January 2026 to capitalize on this expected move. Another approach is to sell out-of-the-money put options below the recent low of $3,634. This strategy allows for collecting premium while betting that strong support will hold on any further dips.

However, we should still prepare for a potential short-term pullback before the market enters its stronger seasonal period. A prudent strategy would be to purchase some cheaper, shorter-dated put options with October or November expirations to hedge against any unexpected volatility. This provides a safety net for long positions without sacrificing too much upside potential.

The seasonal trend for gold is historically strong in December and January, with data over the last 15 years showing positive average returns during this window. Therefore, any market weakness over the next several weeks could present a strategic opportunity. Traders might view any dip towards the mid-$3,600s as a final chance to build positions ahead of this period.

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