Gold climbed to $4,350 during the North American session, successfully resisting the pressures of rising US Treasury bond yields and a stronger US Dollar. By the end of the session, gold was trading at $4,344 after bouncing back from a low of $4,309. This resilience came amid fears of rising unemployment and reduced consumer spending on durable goods.

### Rising Global Yields and Gold The Bank of Japan’s increase of its rate to 0.75% raised global yields. However, gold remained strong due to uncertainty from the Federal Reserve and low trading volumes during the holidays. Last week, gold reached a high of $4,374 but struggled to hit this year’s high of $4,381 as global bond yields rose. John Williams, the President of the New York Federal Reserve, shared a neutral outlook on monetary policy. Expectations for a rate cut in January remained steady. The US Dollar Index rose by 0.22%, and US 10-year Treasury yields also increased, showing how they move in the opposite direction of gold prices. In 2022, central banks purchased 1,136 tonnes of gold, boosting gold’s reputation as a safe-haven asset and a hedge against inflation. Gold’s price movements are closely linked to the US Dollar. Geopolitical factors and interest rates also play a role. A weak US Dollar generally raises gold prices, while a strong Dollar tends to limit them. Reflecting on last year, gold displayed unusual strength around $4,350, even with firm US Dollar and Treasury yields. The market was considering weak consumer confidence and a rate hike from the Bank of Japan, paving the way for a strong, if uncertain, year for bullion. ### Market Trends and Predictions The bullish predictions from late 2024 have largely been confirmed, with gold trading around $4,600 as we near the end of 2025. This rise followed the Federal Reserve’s two 25-basis-point rate cuts over the summer—something traders had expected for over a year. However, the journey was bumpy, as persistent inflation prevented the Fed from being bolder. Currently, the 10-year Treasury yield hovers around 4.05%, slightly lower than last year’s levels. Yet, US inflation data for November 2025 showed a stubborn 3.1%. This situation has compressed real yields, making a non-yielding asset like gold more appealing. Institutional demand remains strong, with central banks reportedly adding about 950 tonnes to global reserves through the third quarter of 2025. For derivative traders, the positive overall trend means that holding long positions is costly and risky at these high prices. Implied volatility is expected to rise as the holiday trading slows down, which will make options more expensive. Strategies like bull call spreads could be wise, allowing traders to capitalize on potential gains while limiting both costs and risks. It’s important to consider hedging against possible downturns. Any unexpectedly hawkish comments from the Fed in January could lead to a swift market pullback. Key support lies around the psychological $4,500 level. If this level breaks, it could trigger a quick decline. Traders might consider using put options or put spreads to secure profits or prepare for a short-term correction in the new year. Create your live VT Markets account and start trading now.

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