Gold’s price has struggled to break past the $4,000 level, unable to confirm gains beyond the resistance range of $4,030-$4,040. Rising US Treasury yields and a stronger US Dollar, due to lowered expectations for Federal Reserve interest-rate cuts, have put pressure on precious metals. On Thursday, gold made a slight recovery but couldn’t maintain gains above $4,030, as higher yields and a firm Dollar acted as obstacles. Failing to break through this key resistance may leave the $3,900 support level at risk, with prices trading around $3,920.

Technical Indicators Show Mixed Signals

Technical indicators like the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) are showing mixed results. If gold can rise above $4,040, it could ease bearish pressures and aim for targets of $4,150 and $4,220. However, if it falls below $3,890, prices might drop to $3,820. Central banks are the largest gold buyers, purchasing 1,136 tonnes valued at about $70 billion in 2022. Gold typically moves inversely to the US Dollar and Treasury yields and serves as a hedge against economic uncertainty, geopolitical issues, and inflation. Its price is affected by various factors, including interest rates and USD trends. Currently, gold is trading in a narrow range, struggling to stay above the crucial $4,000 mark. Strong resistance is present around $4,030-$4,040, while initial support is near $3,900. This stagnant movement results from a stronger US Dollar and rising Treasury yields. The Federal Reserve’s recent hints against further interest rate cuts this year are the primary reason for this pressure. Recent government data reveals that core inflation for September 2025 increased slightly to 3.1%, supporting the Fed’s cautious approach and pushing the Dollar Index (DXY) to a three-month high of 107.50. With the 10-year Treasury yield now firmly over 4.12%, it’s a challenging time for non-yielding assets like gold.

Trading Strategies for Stagnant Prices

Given the current environment, options traders may want to explore strategies that benefit from downward movement or continued stagnation. Buying put options with strike prices below the $3,900 support could help protect against a drop toward the $3,820 target. Alternatively, selling covered calls above the $4,040 resistance could provide income while gold remains in this range. The lack of clear directional momentum, as seen in the mixed technical indicators, suggests that volatility could be mispriced. With the Relative Strength Index around the 50-midpoint, implied volatility in gold options has been decreasing. This decline might create an opportunity to buy straddles or strangles near the $4,000 level, preparing for a significant price move once this consolidation ends. It’s essential to keep in mind the strong demand from global central banks, which helps support gold prices in the long run. According to the World Gold Council, central banks added another 250 tonnes to their reserves in the third quarter of 2025, continuing their trend of diversifying away from the US Dollar. This fundamental backing indicates that any sharp sell-off could attract substantial buying interest. A similar trend occurred between 2022 and 2023, where aggressive Federal Reserve actions pressured gold prices even amid high inflation. Eventually, the market shifted focus back to geopolitical risks and long-term debt sustainability, driving gold to new highs. This historical context suggests that while short-term prospects are linked to interest rate expectations, the long-term outlook for gold remains strong. Create your live VT Markets account and start trading now.

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