Initial jobless claims in the United States were reported at 191,000, lower than the expected 220,000 as of November 28. This trend may impact future monetary policy decisions. Economic data released on Tuesday showed varied reactions in currency pairs. The EUR/USD stayed above 1.1650, and the GBP/USD bounced back slightly above 1.3350 after some earlier declines.

Gold Market Trends

Gold prices rallied to $4,200 but struggled to maintain their momentum. Although employment data was better than expected, a weak US Dollar limited potential gains for XAU/USD. Cryptocurrencies like Bitcoin, Ethereum, and Ripple halted their two-day recovery. The positive impact from Vanguard Group’s easing restrictions on crypto ETFs seemed to fade. Speculation about a possible interest rate cut by the Federal Reserve in December continues. Recent policy changes have created uncertainty as the market tries to interpret the Fed’s signals. There are numerous broker recommendations available for 2025, featuring top brokers, best practices, and opportunities across various global markets. This information is for informational purposes and should not replace personalized investment advice. Readers should conduct thorough research before making financial decisions. The jobless claims data from last week shows that the labor market remains strong, with only 191,000 new claims filed, compared to an expectation of 220,000. This typically indicates no need for the Federal Reserve to cut interest rates. However, the market seems to be looking beyond this and still anticipates a rate cut in December.

Inflation and Fed Policy

This may be due to other data suggesting a slowing economy, which aligns with the Fed’s recent cautious approach. For instance, the Core PCE inflation report for October 2025 was 2.8%, closer to the Fed’s 2% target than the elevated levels seen throughout 2024. Traders believe the Fed is more focused on cooling inflation than strong employment figures. For those trading currency derivatives, the weaker US Dollar seems to be the path of least resistance. This is evident with the EUR/USD trading above 1.1650 and the GBP/USD remaining steady over 1.3350. Buying call options on these pairs could be a way to profit from the momentum if the Fed follows through with a rate cut. In the interest rate markets, futures contracts show a strong likelihood of a 25-basis-point cut. This indicates that the straightforward trade has already been made, shifting the focus to volatility. Options like straddles on SOFR futures could be profitable if the Fed surprises the market by cutting more than expected or not cutting at all. Gold staying near a record $4,200 an ounce signals that traders expect lower real yields, making non-yielding assets more appealing. We observed a similar trend when gold surpassed its previous highs in 2023, reacting to changes in Fed policy. Traders might consider call spreads on gold futures to take advantage of expectations for a continued rally due to Fed easing. The main risk to this outlook is if the Fed surprises the market by sticking to the strong labor data and keeping rates steady. Such a move could lead to a sharp rise in the US Dollar and a sell-off in stocks and gold. Because of this, holding some inexpensive, out-of-the-money put options on major indices could be a useful hedge. Create your live VT Markets account and start trading now.

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