Gold prices have crossed the $3700 level for the first time. This rise is linked to strong economic data from the US and expectations regarding the Federal Reserve’s policy decisions. Retail sales and import prices were better than expected, while a slight weakness in the labor market suggests a possible 25 basis point rate cut, marking the first reduction since December. Easing measures may continue into 2026. From a technical viewpoint, gold’s price lows in August found support near the 100-day moving average, creating a positive outlook. The $3452–$3500 range was broken on September 2, then retested and confirmed the breakout. After this, gold prices stabilized from last week’s highs, resetting momentum. This pause was helpful, as buyers returned, pushing prices to new record levels.

The Upward Trend

The upward trend still holds strong today, indicating potential for more gains. Meanwhile, the US dollar is falling against major currency pairs, with the biggest drop against USDCHF at -0.84%. The dollar is also slightly down versus AUD and NZD. The market is anticipating about a 90% chance of a 25 basis point rate cut tomorrow, which would be the first since December 2024. This expectation follows a weaker August jobs report, which revealed a gain of just 85,000 jobs. Such labor market softness provides the Federal Reserve with the justification needed to begin easing. With gold reaching new all-time highs above $3700, buying call options seems like a smart move to seize further gains. The recent consolidation has allowed momentum to reset, and this breakout appears strong. Traders might want to consider options that expire in October or November to provide enough time for the trade to develop. We’ve also observed that implied volatility in gold options has risen to 18.5, resulting in higher costs for naked long calls. A more defined strategy could involve bull call spreads, which could profit from gradual increases while limiting upfront costs.

Opportunities In Futures Markets

The overall weakness of the US dollar offers another opportunity, especially in the futures markets. We are considering shorting USD futures contracts, as the expected Fed cut contrasts with actions from other central banks. The significant drop in USDCHF exemplifies this, particularly after the Swiss National Bank indicated it would keep rates steady last week. Reflecting on the easing cycle that began in mid-2019, gold rose sharply as the Fed cut rates. We anticipate a similar scenario now, where falling real yields should support precious metals. History indicates that this initial movement could maintain its momentum well into 2026. Create your live VT Markets account and start trading now.

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