Gold Prices and Growth Outlook

Gold prices rose to over three-week highs, reaching $4,213, amid expectations of a dovish US Federal Reserve decision in December. Stellar (XLM) is nearing its resistance level at $0.297, suggesting a potential breakout soon. In the US, market optimism boosted risk sentiment, with European indices performing well, although the FTSE 100 saw a slight drop. Hyperliquid (HYPE) stayed above $38 despite a loss related to Hyperliquid Provider (HLP). FXStreet offers market insights but emphasizes the need for thorough research before investing. It does not guarantee the accuracy of its information and reminds investors that there are significant risks involved. Australia’s full-time employment surged by 55.3K, indicating strong economic growth that the Reserve Bank of Australia (RBA) cannot ignore. This makes it unlikely for the RBA to cut interest rates soon, especially given its recent comments. Derivative traders may view this as a bullish sign for the Australian dollar. Last week, the RBA kept its cash rate at 4.35%. With the Australian Bureau of Statistics reporting annual inflation still at a high 3.8%, the strong jobs report supports a hawkish outlook. Accordingly, buying AUD/USD call options that expire in early 2026 could be a valuable strategy, as it positions investors for a stronger currency supported by high interest rates while limiting potential losses.

The Effect of US Federal Reserve Uncertainty

The strength of the Australian dollar is even more pronounced against the weak Japanese Yen, which is suffering from the Bank of Japan’s loose monetary policy. This carry trade dynamic has been evident throughout 2023 and 2024. The AUD/JPY pair is already testing its yearly highs, and traders can explore bull call spreads for further gains as the policy gap widens. Meanwhile, the market is uncertain about the next move of the US Federal Reserve, creating volatility for the US dollar. Gold prices are rising as traders expect rate cuts from the Fed, which is reflected in the CME FedWatch Tool showing a 45% chance of a rate cut by March 2026. This uncertainty makes buying volatility through straddles on major pairs like the EUR/USD a smart trading strategy for the upcoming weeks. Create your live VT Markets account and start trading now.

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