**Gold Price Analysis** Gold prices increased to $4,145, rising by over 1.10% after two days of declines. This spike comes as traders await the US Consumer Price Index (CPI) release and amid geopolitical tensions, particularly US sanctions on Russia. Despite experiencing its largest single-day loss in five years on Tuesday, gold is still up 57% for the year. Investors expect the US CPI report to show a 3.1% year-over-year increase for September. Meanwhile, the US Dollar Index went up by 0.13% to 99.01, and the US 10-year Treasury yield climbed to 3.997%. However, gold prices seem unaffected by these trends, with projections indicating an average price of $5,055/oz by Q4 2026. If gold surpasses the $4,161 level, it may test $4,200. Support levels are at $4,100 and $4,059. The World Gold Council highlighted that central banks purchased 1,136 tonnes of gold worth around $70 billion in 2022. Gold’s price is shaped by various factors, such as geopolitical issues and interest rates. Typically, gold rises with lower interest rates and falls when the dollar is strong. Gold tends to increase in value when the US dollar weakens, showing an inverse relationship with the dollar and treasuries. **US Inflation Insight** With tomorrow’s US inflation report being the focus, gold remains steady above $4,100. The market is anticipating a 3.1% CPI, but the higher-than-expected Producer Price Index from last week raises the chance of a surprising increase. The next 24 hours are crucial for short-term direction, as a strong inflation number could quickly pull gold back toward $4,000. Interestingly, gold’s rally is defying the usual pressures from a strong dollar and rising bond yields. This suggests that fears over geopolitics and a move to safer assets are currently dominating the market. The World Gold Council’s recent Q3 2025 report indicates that central banks, especially in Asia, purchased an additional 260 tonnes of gold, reinforcing the idea of structural demand. The market has already factored in 50 basis points of Fed rate cuts for the rest of the year, which is a significant boost for bullion. Unlike the aggressive rate hikes we saw in 2022 and 2023, the Fed now seems restricted by slowing global growth. Any signs of economic weakness could accelerate these rate cut expectations, pushing gold prices higher. For those wanting to invest as gold moves toward the $4,200 level, buying call options is a straightforward strategy. However, with high implied volatility before the CPI release, a bull call spread may be a more sensible choice to reduce upfront costs. This method allows you to benefit from potential gains while limiting risk if the inflation data is high and gold prices fall back. **Risk Management Strategies** Conversely, if we believe the CPI will be stronger than expected, it might lead to a sharp drop to the $4,000 support level. Buying puts or setting up a bear put spread can be effective for hedging long positions or speculating on a short-term decline. Tuesday’s sudden sell-off reminds us how quickly the market can change. Create your live VT Markets account and start trading now.

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