Insights 
VT 
Gold’s price reached approximately $4,010 during Thursday’s early Asian session, influenced by the US government shutdown and potential Federal Reserve rate cuts. Tensions eased in the Middle East as Israel and Hamas agreed to a peace plan, yet the ongoing US economic and political issues maintained demand for gold, a safe-haven asset.
The gold price remains near $4,010, after falling from a record $4,059. Concerns over economic stability surfaced as the US government shutdown, now in its ninth day, persisted with little progress. The Federal Reserve lowered interest rates in September, its first reduction since late 2024, suggesting more cuts could follow.
The Federal Reserve’s Impact
The Federal Reserve’s potential rate cut may support gold in the short term as lower rates decrease the holding cost of non-yielding assets like gold. Despite this, reduced geopolitical tension in the Middle East could limit gold’s price rise. Central banks have been significant gold buyers, with 1,136 tonnes added to reserves in 2022, the highest annual purchase on record.
Gold prices often rise with economic uncertainty, but a strong US dollar can keep prices stable. Geopolitical instability, such as fears of recession and lower interest rates, can drive prices upward. The asset is priced in dollars, so a weaker dollar typically pushes gold prices higher.
Given that gold is holding gains above $4,000, we should remain focused on the primary drivers, which are domestic US issues. The ongoing government shutdown and the Federal Reserve’s dovish stance are providing strong support for the metal. These factors are currently outweighing the easing of geopolitical tensions in the Middle East.
We must consider the historical precedent for government shutdowns and their impact on safe-haven assets. Looking back, we saw similar strength in gold during the prolonged shutdowns of 2013 and late 2018, as uncertainty about US fiscal stability weakened the dollar. With the current shutdown now in its ninth day, call options on gold could be attractive if political deadlock persists.
The Potential Strategies
The Federal Reserve’s policy is perhaps the most significant tailwind. With one rate cut already delivered in September 2025 and markets pricing in a nearly 78% chance of another in December, the opportunity cost of holding non-yielding gold will continue to fall. This fundamental support makes selling puts or establishing bull put spreads a potentially viable strategy for income generation.
We should also look at the bigger picture of institutional demand, which remains robust. Central banks have been on a historic buying spree, with the World Gold Council reporting they added a record 1,136 tonnes in 2022 and another 1,037 tonnes in 2023. This underlying bid provides a strong floor for the market, making any significant sell-off less likely.
However, the Israel-Hamas peace plan introduces a key variable that could cap further gains. If the agreement holds and hostages are released as planned, the geopolitical risk premium that helped push gold to record highs could quickly evaporate. This makes buying protective puts a prudent hedge against a sudden resolution to the government shutdown or positive follow-through on the peace deal.
The conflicting signals between bullish domestic policy and bearish international developments suggest implied volatility may rise. This environment is ideal for strategies like long straddles or strangles, which would profit from a large price move in either direction. We should prepare for sharp swings as news develops on either the shutdown or the Middle East peace process.
