Gold is performing well as the Federal Reserve leans towards a less aggressive policy, even though a stronger US Dollar is curbing its gains. Right now, Gold (XAU/USD) is priced at approximately $4,335, up nearly 0.70% for the day, and is showing a positive trend below the $4,350 resistance level. Anticipation of relaxed monetary policy in 2026 is growing, particularly after recent weak US labor data. Investors are focused on the upcoming Consumer Price Index (CPI) report, and comments from the Federal Open Market Committee may provide more clarity on future Fed policies.

US Dollar and Employment Data

The US Dollar Index is around 98.50 after briefly dipping below 98.00, marking its lowest point since October 3. US employment data reveal an increase of 64,000 jobs in November, surpassing expectations, but the Unemployment Rate has risen to 4.6%, the highest since September 2021. Technical analysis shows that XAU/USD is settling below $4,350, with possible support at $4,310 from the 21-period Simple Moving Average. A significant breakthrough above $4,350 could lead to further gains, as the Relative Strength Index and Average Directional Index indicate neutral to bullish momentum. Gold is regarded as a safe investment and a hedge against inflation, with central banks maintaining large reserves. Typically, its price moves in the opposite direction of the US Dollar and risk assets, influenced by geopolitical stability and interest rates. As of December 17th, 2025, gold is positively influenced by expectations of the Federal Reserve easing its policies next year. Recent labor data shows the unemployment rate climbing to a four-year high of 4.6% in November, supporting the view that the economy is slowing enough for potential rate cuts in 2026.

Traders’ Strategy Amid CPI Report

For derivative traders, this scenario suggests a cautiously optimistic approach. With Core CPI decreasing to 2.8% this year, down from the highs of 2023, the likelihood of a dovish Fed is strengthening. Since gold is currently consolidating below the crucial $4,350 resistance level, selling out-of-the-money puts may be a smart move to earn premiums while awaiting a clearer upward trend. The upcoming CPI report this Thursday is a pivotal event likely to create volatility. Traders might consider using options straddles or strangles to prepare for a significant price movement in either direction, although the general trend leans upward. Historically, gold often performs well in the lead-up to the first actual rate cut, as seen in 2019 before the Fed started its easing cycle. From a technical standpoint, the $4,350 resistance is crucial, and a sustained break above it could spark a rally towards all-time highs. Call spreads can be employed to capitalize on this potential breakout with limited risk. On the flip side, the support zone around $4,250 is an important area for initiating or adding to long positions. Additionally, we must consider the ongoing support from geopolitical tensions and central bank purchases. The reported US blockade of Venezuelan oil tankers contributes to global uncertainty, boosting gold’s appeal as a safe haven. Central banks have continued their strong purchasing trend since their record-breaking acquisitions in 2022, ensuring steady demand and minimizing the risk of significant price declines. Create your live VT Markets account and start trading now.

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