Insights 
VT 
The price of gold (XAU/USD) reached an all-time high of $4,218, climbing by over 1.40% amid escalating trade tensions and political uncertainty in the US. The gold price has surged more than 60% this year, driven by geopolitical tension, expectations of Federal Reserve rate cuts, central bank purchases, and robust ETF inflows.
Attempts by US Treasury Secretary Scott Bessent to ease trade tensions with China were largely ignored, as traders focused on gold’s safe-haven appeal. Economic concerns were underscored by a Federal Reserve report indicating stagflation amidst high inflation, and the ongoing US government shutdown, which has lasted 15 days.
Gold Prices and the US Dollar
Gold prices remain underpinned by the weakening US dollar, with the Dollar Index falling by 0.28% to 98.75. Fed Chair Jerome Powell hinted at moving interest rates to more neutral ground as inflation pressures increase, with forthcoming updates on consumer prices amidst the government shutdown.
Technically, gold remains strong, with momentum favouring a test of $4,300. Investors are betting with a 98% probability on a rate cut at the Federal Reserve’s upcoming meeting. Future price movement will be influenced by geopolitical events and US economic data.
The powerful upward trend in gold is being fueled by ongoing political turmoil, a prolonged government shutdown, and escalating trade tensions. We see these factors continuing in the coming weeks, creating a strong case for bullish derivatives strategies. Traders should consider buying call options with strike prices at or above $4,300 to capitalize on this momentum.
Recent data reinforces this bullish sentiment, with the latest Commitment of Traders report from last week in October 2025 showing that money managers have increased their net long positions for a fifth consecutive week. Furthermore, gold-backed ETFs saw another $5 billion in inflows in the first two weeks of the month, indicating strong investor demand. This confirms that both institutional and retail interest is firmly behind the rally.
Key Events to Watch
The key events to watch are the CPI inflation report on October 24 and the Federal Reserve meeting on October 28-29. With the market having almost fully priced in a rate cut, any surprisingly high inflation number would intensify the stagflation fears mentioned in the Fed’s Beige Book. We believe this scenario would serve as another major catalyst, likely pushing gold prices even higher.
This environment is drawing comparisons to the stagflationary period of the 1970s, which saw a historic bull market for precious metals. For those looking to manage risk, a bull call spread is an attractive option, such as buying a $4,250 call and selling a $4,350 call for November expiration. This strategy would lower the initial cost while still providing exposure to the upside.
While the outlook is positive, we should be mindful of key support levels in case of a temporary pullback. The area around $4,150 to $4,100 appears to be a strong floor. Selling cash-secured puts with strike prices near these levels could be a way to generate income while positioning to buy gold on a dip.
