Insights 
VT 
Gold prices have increased by approximately 60% this year, driven by factors such as global trade uncertainties, geopolitical tensions, and US fiscal stability. Central banks and private buyers have accumulated gold at record levels, spurred by the start of the Fed’s easing cycle. This surge pushed gold to record highs before a notable downturn, marking the largest decline in 12 years, as a stronger dollar and easing seasonal demand contributed to the drop.
Despite the sharp decline, the outlook for gold remains strong, supported by macroeconomic uncertainty and diversification needs. Central banks have doubled their buying pace since 2022, influenced by concerns over potential sanctions on foreign assets. The National Bank of Poland is the year-to-date top buyer, planning to increase its gold reserves significantly.
Role Of Etfs
Additionally, ETFs have played a considerable role in this year’s gold rally, with holdings increasing, particularly in September. Compared to their peak in 2022, opportunities for further growth in ETF holdings exist. Geopolitical concerns and central bank demand underpin this, while expectations of more monetary easing limit the downside. Current market fluctuations are viewed as a healthy correction within a broader positive trend for gold.
We’ve seen gold pull back sharply this week after its massive 60% rally so far in 2025, pushing volatility to multi-month highs. The CBOE Gold Volatility Index (GVZ) has spiked nearly 30% this week, making buying options outright more expensive for traders. A more prudent approach may be to sell cash-secured puts below current prices, collecting rich premiums while setting a lower entry point.
Despite the pullback, the long-term bullish case remains solid, driven by structural demand from central banks. The latest World Gold Council data for Q3 2025 confirmed another 250 tonnes were added to official reserves, continuing a trend we’ve seen since the geopolitical shifts back in 2022. This persistent buying provides a strong floor for the market, limiting how far prices are likely to fall.
Viewing Correction As Opportunity
After the huge inflow of over 150 tonnes into gold-backed ETFs in September, this week’s price drop has triggered some minor profit-taking, but holdings remain far below the peaks we saw in 2022. With the market now pricing in an 85% chance of another Fed rate cut in December according to CME FedWatch data, any significant dips will likely be viewed as buying opportunities. This suggests the recent selling is a healthy correction rather than a change in the primary trend.
Given the expectation of near-term volatility but a positive underlying trend, traders should view this correction as a chance to structure new bullish positions. Instead of buying expensive calls, consider using bull call spreads to cap costs and define risk. This allows for participation in the potential rebound as the market stabilizes while protecting against another sudden drop.
