Insights 
VT 
Impact of US Economic Policies
In the United States, the government shutdown is in its fourth week, as the Senate failed for the 11th time to advance funding. President Trump’s stance on tariffs has softened, yet he still predicted a positive outcome from a potential meeting with China’s President Xi Jinping.
The US central bank is expected to cut interest rates next week, with a 99% chance of another cut in December, as indicated by the CME FedWatch tool. Gold’s role as a safe-haven asset is highlighted, with its inverse relationship to the US Dollar and market risk.
Given the current market environment on October 22, 2025, we are seeing a familiar pattern of rising uncertainty that favors safe-haven assets. Geopolitical tensions are simmering, and fears of a slowdown in global growth are creating headwinds for riskier assets like stocks. This environment reinforces gold’s traditional role as a store of value during turbulent times.
The Federal Reserve’s recent stance is a critical factor for us to consider. After the latest Consumer Price Index (CPI) report for September 2025 showed core inflation remaining stubborn at 3.1%, the CME FedWatch tool indicates markets are pricing in a 90% chance the Fed will hold rates steady in November. However, futures markets are now signaling a growing probability of a rate cut in the first quarter of 2026, which would reduce the opportunity cost of holding non-yielding gold.
We only have to look back to the political volatility of the late 2010s to see how quickly things can shift. We remember the prolonged government shutdown in late 2018 and early 2019, and the constant trade tensions between the US and China, which created significant market swings. Similar political gridlock today could easily trigger a flight to safety, benefiting gold prices as it did during those periods.
Strategies for Derivative Traders
For derivative traders, this suggests a strategy of positioning for potential upside in the coming weeks. We believe buying gold call options could be an effective way to capture a sharp upward move driven by any unexpected geopolitical event or dovish signal from the Fed. The rising market uncertainty has also pushed up implied volatility, making options strategies more dynamic.
The U.S. Dollar’s performance provides another tailwind for the precious metal. The Dollar Index (DXY) has softened, falling from its highs earlier this year to trade around the 103 level. A weaker dollar generally has an inverse correlation with gold, making the metal cheaper for holders of other currencies and boosting its appeal.
Furthermore, the trend of central bank buying continues to provide a strong floor for the gold price. Following the record-breaking purchases we saw in 2022, central banks, particularly in emerging markets, have remained net buyers through 2024 and 2025 to diversify their reserves. This consistent, large-scale demand is a powerful long-term bullish signal that supports prices against significant downturns.
