**Gold and Rate Cuts** Gold has drawn sellers recently due to the Israel-Hamas peace deal affecting safe-haven assets. Speculation about a US Federal Reserve rate cut and a potential US government shutdown have limited movement in the US Dollar, which has supported gold prices. Traders are especially focused on Fed Chair Jerome Powell’s upcoming speech for hints about rate cuts. Gold has rebounded towards $4,000, recovering most of its losses from the Asian session. Anticipation of more Fed rate cuts helps boost gold prices, while worries about a prolonged US government shutdown also aid this momentum. Even with peaceful developments in the Israel-Hamas situation, gold seems to be heading upward. Currently, there’s a 93% chance of a rate cut in October and a 79% chance in December. The ongoing US government shutdown is weakening the US Dollar, benefiting gold. Tensions with Russia regarding potential US missile supplies to Ukraine are also increasing geopolitical risks, which support gold’s stability. **Technical Analysis** From a technical viewpoint, gold remains strong at around $4,000. If it breaks above $4,035-$4,036, it could signal further gains. A move above $4,100 might lead to even higher prices. However, if gold falls below $4,000, it may test support levels around $3,948-$3,947, potentially leading to further declines. As of October 9, 2025, gold is holding steady above the crucial $4,000 level. The recent dip was quickly bought back up, indicating ongoing bullish sentiment. The key factor here is the general expectation of more interest rate cuts from the Federal Reserve this year. This can be understood in light of the Fed’s major policy shift that began in late 2023 and continued into 2024. With Core PCE inflation dropping to 2.6% by the end of 2024, the stage was set for the current easing cycle. The CME FedWatch Tool shows a 93% likelihood of a cut this month, signaling that the market anticipates lower interest rates, which supports gold. **US Government Shutdown Impact** The ongoing US government shutdown, now in its ninth day, is further weakening the US Dollar. This situation brings to mind the 35-day shutdown between 2018 and 2019, which created market uncertainty and often benefits safe-haven assets. The political gridlock is providing a consistent boost for gold prices and limiting any significant gains for the dollar. While the Israel-Hamas peace agreement has led to some short-term profit-taking, broader geopolitical risks remain in play. Ongoing tensions with Russia remind us of the conflicts that supported gold’s historic rise in 2024. This backdrop should prevent any significant downside for the precious metal in the coming weeks. For derivative traders, a wise strategy would be to buy call options with strike prices above the recent all-time high of about $4,060. This allows participation in potential upward trends while minimizing risk. More conservative traders might look at selling cash-secured puts or bull put spreads with a strike price below the strong psychological support level at $4,000 to collect premium. With Fed Chair Jerome Powell’s speech on the way, a rise in volatility is likely. Traders could prepare for this by using straddles, which involve buying both a call and a put option with the same strike price and expiration date. This strategy would profit from significant price movements in either direction after his remarks. Create your live VT Markets account and start trading now.

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