Insights 
VT 
Pressure on Gold
In the United States, the four-week average for initial jobless claims increased slightly from 220.75K to 221.75K as of 8 August. This change reflects modest adjustments in the labour market amidst varying economic conditions.
The Euro/US Dollar pair experienced pressure, dropping below 1.1650 due to a robust performance from the US Dollar, which strengthened on the back of favourable economic data. Similarly, the GBP/USD saw a decline to daily lows around the 1.3530-1.3520 range, influenced by the Greenback’s upward momentum.
Gold remains under selling pressure, staying defensive near the $3,330 region per troy ounce, affected by the US Dollar’s rise and heightened US yields. Meanwhile, Bitcoin experienced a correction after hitting a new record high of $124,474, settling at $121,615.
Threat of Trade Conflicts
Factors suggest an escalation in the US trade conflict, which could cut global output by an estimated 0.7 percentage points in the medium term. This environment underscores the need for careful consideration of investment strategies, especially within volatile markets, to manage risks effectively.
With the four-week average for jobless claims holding firm at 221.75K, the US labor market appears stable enough for the Federal Reserve to maintain its current stance. The July 2025 Consumer Price Index (CPI) data showed inflation persisting at 3.1%, giving the central bank little reason to consider cutting rates. This reinforces our view of a strong US Dollar in the near term.
Given the dollar’s strength, we anticipate further weakness in currency pairs like EUR/USD and GBP/USD. The Euro is particularly vulnerable, with the August 1st, 2025, manufacturing PMI for the Eurozone showing a contraction at 48.5 for the second month. We believe buying put options on these pairs could be a sound strategy to hedge against or profit from a continued downtrend.
Gold’s struggle near the $3,330 mark is directly tied to the strong US dollar and rising bond yields. The 10-year US Treasury yield hitting 4.95% this week, a high not seen since the inflation concerns of 2024, makes holding non-yielding gold expensive. We are looking at shorting gold futures or purchasing puts as this pressure is unlikely to ease soon.
For Bitcoin, the recent correction from its record high above $124,000 suggests a period of consolidation or increased volatility. Open interest in Bitcoin perpetual futures on major exchanges has pulled back by 15% from its peak last week, indicating some leveraged traders are closing positions. We think a long straddle, buying both a call and a put option, could be an effective way to play the expected price swings.
The threat of escalating trade conflicts is a major factor influencing our overall market view. This situation feels similar to the tariff disputes back in 2023 and 2024, a period where the VIX index frequently jumped above the 25 mark. Therefore, holding some VIX call options or other broad market hedges might be prudent to protect our portfolio against sudden shocks.
