Insights 
VT 
Gold is trading around $3,950 per troy ounce after ending a four-day losing streak. Central bank purchases and increased ETF inflows have tightened metal supply in both official and exchange channels.
Federal Reserve Chair Jerome Powell mentioned that a rate cut in December is uncertain, which pushed 10-year Treasury yields above 4%, raising the cost of holding non-yielding bullion. The Fed announced a 25 basis point interest rate cut, but economic outlook remains unchanged.
Fed Easing and Gold Pressure
The Fed plans to reduce its Quantitative Easing (QE) practices by shifting its mortgage-backed asset balance sheet to long-term Treasuries by December 1. Gold is under pressure with expectations of higher yields and a stronger US Dollar (USD).
Gold faces challenges due to improved market sentiment amid optimism for a trade deal between the United States and China. Presidents Trump and Xi Jinping are meeting soon in South Korea.
Gold is valued as a safe-haven asset and hedge against inflation. Central banks are the largest Gold holders, buying 1,136 tonnes worth $70 billion in 2022. Gold inversely correlates with the US Dollar and Treasuries, affecting its price based on geopolitical events and interest rates.
We are seeing gold hold around the $3,950 mark after several days of losses, presenting a critical decision point for traders. The underlying support from strong central bank buying and new ETF inflows is clashing directly with a cautious Federal Reserve. This tension suggests that while the floor might be solid, the ceiling is being heavily defended.
Implications of Treasury Yields
The Fed’s recent interest rate cut was accompanied by comments that put a December cut in doubt, pushing the 10-year Treasury yield back above 4%. For gold, which offers no yield, this is a significant headwind that increases the cost of holding the metal. Traders should view rallies toward the $4,000 level with caution, as higher yields could easily cap price advances.
To add credibility to the buying pressure, the World Gold Council’s most recent data for Q3 2025 confirmed that central banks purchased another 280 tonnes, continuing the strong trend we saw back in 2022. Furthermore, statistics from major exchanges show global gold ETFs registered net inflows of over $2 billion in October 2025, a sharp reversal from the outflows seen mid-year. This physical demand is providing a strong buffer against the Fed’s less accommodative stance.
Looking back, we can draw parallels to the market volatility seen during the US-China trade negotiations in the late 2010s, which often caused sharp, headline-driven moves in gold. That period taught us that geopolitical factors can quickly override monetary policy concerns, creating opportunities for those positioned for sudden price swings. Therefore, any new geopolitical instability could easily ignite another rally despite the interest rate environment.
Given this complex picture, options strategies could be particularly useful in the coming weeks. Implied volatility is likely to remain elevated, making selling premium through covered calls against physical holdings or via bear call spreads an attractive strategy for those who believe the upside is limited. Alternatively, traders anticipating a break below key support could consider buying puts as a cheaper way to position for a potential downturn driven by rising yields.
