The United States experienced a 2.8% increase in Personal Consumption Expenditures (PCE) prices during the third quarter, which met expectations. At the same time, the economy grew at an annualized rate of 4.3%, surpassing forecasts of 3.3% for that period. Gold prices climbed to $4,497, aided by a weak Dollar, but later fell as strong GDP numbers boosted demand for the currency. Meanwhile, GBP/USD dropped below 1.3500 as the USD gained strength from the solid economic data.

Crypto Market Trends

Bitcoin remained above $87,000 despite ongoing selling pressure in the broader cryptocurrency market, affecting Ethereum and Ripple. A risk-averse attitude continued to pressure Dogecoin, showing weakness in the derivatives market with low Open Interest and funding rates. Looking ahead, the market may face new challenges that could shake up our current views on growth, inflation, and global politics. Attention is now on selecting strategic investments in the brokerage sector, focusing on customer needs and market positioning for 2025. This information is for general knowledge only and does not serve as financial advice. It is important to conduct thorough individual research before engaging in any market activities, as market fluctuations can lead to financial losses. As we approach the end of 2025, the economy is showing mixed signals. The strong GDP growth of 4.3% from the third quarter is now countered by a significant drop in December’s consumer confidence to 89.1. With core PCE inflation steady at 2.8%, the Federal Reserve’s direction for 2026 is highly uncertain.

Strategy for Market Volatility

This is an ideal time for long volatility strategies as we enter the new year. The CBOE Volatility Index (VIX) has risen to 21.5, up from an average of 17 in the previous quarter, indicating increasing market anxiety. Buying VIX call options or call spreads expiring in February 2026 offers a cost-effective way to prepare for potential market fluctuations. With the S&P 500 near all-time highs around 6,200, we see a higher risk of market dips. The notable drop in consumer confidence often signals reduced spending, which could affect corporate earnings in Q1 2026. Consider purchasing out-of-the-money put options on SPY or QQQ ETFs as a hedge against a possible market correction. Gold’s rise to almost $4,500 an ounce reflects strong interest in safe-haven assets. Open interest in COMEX gold futures has increased by 15% over the past month, indicating that new money is coming into this trade. We expect this trend to continue, making long positions in gold futures or buying call options on the GLD ETF appealing. New tariffs on semiconductors from China pose a challenge for the sector. We anticipate that companies heavily dependent on Chinese supply chains will provide cautious guidance for 2026, likely pushing their stock prices down. Establishing bearish positions through put options on the SOXX semiconductor ETF could exploit this specific geopolitical risk. Create your live VT Markets account and start trading now.

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