Insights 
VT 
Gold has continued to experience downward pressure amid hopes for a trade deal between the US and China. The precious metal decreased nearly 2% on Monday, trading close to the $4,000 support region. US President Donald Trump’s comments on a potential trade deal with China have eased worries about further trade restrictions, impacting global market sentiment.
Technical Perspective On Gold
From a technical standpoint, gold is in a bearish correction phase, retreating from its all-time highs near $4,400. The price action remains constrained below the previous support level of $4,185, reinforcing the bearish trend. Immediate support is near the $4,000 mark, a significant psychological level that has held since October 22. Below this, the October 9 and 10 lows at $3,945 and the 61.8% Fibonacci retracement level are key areas for potential corrections.
Gold is negatively correlated with the US Dollar and US Treasuries, generally rising when the Dollar depreciates. Geopolitical tensions and recession fears often lead to increased demand for gold due to its safe-haven status. Central banks are the largest gold buyers, adding 1,136 tonnes worth around $70 billion to their reserves in 2022, the highest yearly purchase recorded, with emerging economies rapidly increasing their gold reserves.
Given gold’s vulnerability, we are watching the $4,000 level very closely. The metal is on its back foot as risk appetite grows, fueled by the S&P 500 posting its best week of the quarter and strong Q3 corporate earnings. This market sentiment is drawing capital away from safe-haven assets like gold.
We’ve seen new data that supports this bearish outlook. The World Gold Council’s latest report for Q3 2025, released last week, showed central bank gold purchases slowed to just 180 tonnes, the lowest quarterly figure since early 2023. This is a significant shift from the record-breaking buying we saw back in 2022 and removes a key pillar of support for the price.
For traders anticipating a break below the $4,000 psychological support, buying put options is a direct strategy. We see potential in targeting strike prices around the $3,945 level, which aligns with previous lows seen earlier in October. Expirations in late November or early December would give this trade time to play out.
Considerations For Traders
However, we must also consider the Federal Reserve’s shifting tone on interest rates. The latest inflation report showed core CPI dipping to an 18-month low of 3.1%, and because of this, the CME FedWatch tool now shows a 45% probability of a rate cut in Q1 2026. Any further dovish signals from the Fed could quickly put a floor under gold prices, as lower rates reduce the opportunity cost of holding the non-yielding metal.
To manage this uncertainty, a bear put spread could be a more prudent approach. This would involve buying a put at a strike like $3,950 and simultaneously selling a put at a lower strike, such as $3,850. This strategy limits the potential profit but significantly lowers the initial cost and risk if the price unexpectedly reverses.
The Gold Volatility Index (GVZ) has fallen to a three-month low of 15.2, making options relatively cheap right now. This presents an opportunity for us to establish positions at a lower cost before a potential breakdown or reversal. It’s an ideal environment to structure trades that can profit from a continued, steady decline toward the next support levels.
