Insights 
VT 
Gold has decreased from two-week highs at $3,400 due to a stronger US Dollar. The speculation around Waller potentially becoming the next Fed Chair has bolstered the US Dollar.
If Gold falls below $3,380, it may continue its descent to $3,350. The inability of Gold bulls to surpass the $3,400 resistance has contributed to its current downward movement, aligning with the US Dollar’s strength.
Us Dollar Influence On Gold
The resurgence of the US Dollar could be short-lived, as Trump’s Fed nominees are anticipated to favour lower rates. Recent jobless claims and unit labour costs data suggest a possible interest rate cut, influencing the US Dollar.
Technically, Gold is near the bottom of an ascending wedge at $3,380, potentially indicating a trend shift. Breaching $3,380 could press further downwards, targeting lows around $3,350.
Central banks are major Gold purchasers, adding 1,136 tonnes to their reserves in 2022, the largest annual purchase on record. Geopolitical tensions and interest rate adjustments often affect Gold prices, given its status as a non-yielding asset.
Gold typically moves inversely with the US Dollar and US Treasuries, serving as a safe-haven during economic instability. It performs well with depreciating global currencies and during downturns in riskier markets.
Market Strategies For Gold Price Movements
We are watching Gold very closely as it tests the $3,380 support level after failing to hold above $3,400. This weakness is tied directly to the US Dollar, which has strengthened with the Dollar Index (DXY) hitting a three-month high of 107.50 this week. The market is pricing in the possibility of Waller, known for his hawkish stance, becoming the next Fed Chair.
Given this technical setup, we see an opportunity for short-term bearish plays if gold breaks decisively below $3,380. Buying put options with a strike price around $3,350 could be a strategic move to profit from this expected downward momentum. This would position us to capture the move towards the next significant support zone seen earlier in the summer of 2025.
However, we believe this dollar strength could be a trap, creating significant volatility in the coming weeks. Recent economic data, such as the July 2025 jobless claims report showing a surprise increase to 245,000, supports the view that the Fed will be pressured to cut rates. This underlying tension makes trading volatility itself, perhaps through long straddles, an interesting prospect.
For those with a longer view, we are looking at building positions for a rebound in gold prices. Purchasing call options with expirations in late 2025 or early 2026 could be wise, anticipating a weaker dollar once the Fed’s direction becomes clearer. We remember the record central bank buying back in 2022, and World Gold Council reports from the first half of 2025 show this trend has continued with another 580 tonnes added to global reserves.
The current situation presents a conflict between short-term technicals and medium-term fundamentals. A potential strategy is to use spreads to manage risk, such as a bear put spread using the $3,380 and $3,350 strike prices to trade the immediate downward risk. This allows us to participate in a potential drop while defining our risk, keeping capital ready for a possible bullish reversal later in the year.
