Gold is holding steady near its record highs in the European session and might see even more gains if it goes above $4,600. Ongoing global conflicts and diplomatic issues make gold more appealing as a safe investment. At the same time, concerns about the US Federal Reserve’s decision-making are weakening the US Dollar from its recent high, making gold more attractive. The latest US job report has lowered expectations for rate cuts from the Fed, which could limit gold’s price rise. Traders may wait and see how this week’s inflation data in the US unfolds before making big bets on gold. Recent military actions and diplomatic statements continue to create risk factors that affect market feelings.

Gold’s Technical Picture

Gold’s upward trend shows strong support in the $4,325-4,320 range, marked by the 200-period Simple Moving Average. Even though conditions might lead to some consolidation due to overbought signals, the overall bullish view remains if support levels hold. If gold breaks through current resistance, it could lead to further gains in a stable market. Market moods are described as “risk-on” or “risk-off,” which influence investment choices. In a “risk-on” scenario, investors favor riskier assets, enhancing currencies linked to commodity exports. On the other hand, “risk-off” times favor safer assets like bonds and gold, along with currencies such as the US Dollar, Japanese Yen, and Swiss Franc, which gain strength due to their stability. With gold near its peak, the current focus is on the risk-off sentiment driven by global tensions. Ongoing issues in Venezuela, Iran, and Ukraine are creating a strong demand for safe havens, reminiscent of the sharp price jumps we saw in late 2023. This ongoing geopolitical risk suggests that buying call options on gold futures, targeting prices above $4,600, could be a key strategy in the next few weeks.

Considering Economic Data

Still, we need to be cautious about what the US Federal Reserve might do next, as strong economic data could hold back gold’s rise. The latest jobs report showed unemployment dipping to 4.4%, reminding us of how the Fed remained cautious through much of 2025, much like its approach in 2023. For traders, strategies like a bull call spread could help profit from expected price rises while managing risk if inflation report comes in higher than the predicted 3.5%, boosting the dollar. The technical indicators show an overbought RSI at 71.82, which often signals a possible pullback or consolidation. This gives traders a chance to hedge their long positions by buying short-term put options near the channel support at $4,365. This would provide some protection against sudden market shifts or a Fed focus on inflation over geopolitical issues. With powerful bullish fundamentals clashing with potentially bearish central bank policies, we can expect increased volatility around the US inflation data release this week. This situation is ideal for strategies based on volatility, such as a long straddle, which involves buying both call and put options at the same strike price. This approach would be profitable if gold makes a significant move in either direction after the data release, taking advantage of the current market uncertainty. Create your live VT Markets account and start trading now.

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