Insights 
VT 
Gold And Central Banks
Gold traditionally holds an inverse correlation with the US Dollar and US Treasuries. It provides a hedge against inflation and depreciating currencies, as it is not tied to any government. Geopolitical instability and economic fears can escalate Gold prices, especially when interest rates are low, or the US Dollar weakens.
Today’s minor drop in the gold price should be viewed as a potential entry point rather than a sign of weakness. We see this as a brief pause within a larger upward trend, driven by gold’s status as a safe-haven asset in turbulent times. This temporary dip offers a chance to position for the volatility we anticipate in the coming weeks.
Influence Of The US Federal Reserve
The market is reacting to signals that the US Federal Reserve may be ending its prolonged interest rate hiking cycle that began back in 2022. With recent economic data from September 2025 showing a cooling economy, lower interest rates would reduce the opportunity cost of holding non-yielding gold. As we learned from the persistent inflation of 2023-2024, investors are quick to seek hedges, and we expect that behavior to intensify.
We are also watching the US Dollar’s performance, which has an inverse relationship with gold. The Dollar Index (DXY) has softened from its 2024 peaks and has been trading in a range around 103 for the past month. A weaker dollar makes gold cheaper for holders of other currencies, which should support global demand moving forward.
Central bank demand continues to provide a strong floor for the gold price, limiting significant downside risk. The record-breaking purchases we saw in 2022 have become a consistent trend, and recent World Gold Council reports for Q3 2025 confirm that emerging market banks are still accumulating gold reserves. This large-scale, consistent buying suggests that major players see long-term value at these levels.
For derivative traders, this environment points towards opportunities in the options market. We believe that buying call options or establishing bull call spreads on gold futures contracts expiring in early 2026 is a prudent strategy. This approach allows for participation in potential price gains while clearly defining and limiting the maximum financial risk involved.
