**Gold Market Anticipations** The DOJ has issued subpoenas related to Powell’s Senate testimony regarding a renovation project. This raises worries about the Federal Reserve’s independence, especially as Trump might announce a potential replacement for Powell. Markets predict two Fed rate cuts this year, but strong labor data suggests that rates could stay the same in January. Gold’s technical analysis shows it has paused below $4,600 due to signs of being overbought. Initial support is at $4,525-$4,500, with possible declines to $4,400. If it moves above $4,600, targets could reach $4,700-$4,750. Investment banks forecast that gold will stay in the range of $4,500-$5,000 per ounce through 2026, influenced by expected Fed cuts and geopolitical issues. Looking back at market reactions in 2025, gold consolidated just below its peak of $4,630 per ounce. The uncertainty around the investigation into Fed Chair Powell and rising geopolitical tensions were significant factors at that time. This environment kept safe-haven demand strong as everyone awaited clear inflation signals. Since then, things have grown more complicated. The final December 2025 inflation report showed a surprising rise of 3.4% year-over-year. This has lowered expectations for the two aggressive Fed rate cuts that everyone was anticipating last year. Now, the market is focused on late spring for the first possible move, making gold sensitive to every incoming data point. **Gold’s Bullish Factors Remain Intact** Even though the political noise surrounding the Fed’s leadership has quieted with a new Chair in place, the fundamental bullish factors for gold remain strong. In 2025, central banks around the world added another 1,037 tonnes to their reserves, marking one of the highest years of purchases on record. This ongoing demand from official institutions continues to provide solid support for prices. Currently, gold has retreated from its highs and is trading near $4,450 as it adjusts to the shift in rate-cut expectations. With the Gold Volatility Index (GVZ) rising to 18, there’s a noticeable sense of uncertainty about the next major move. This offers an opportunity for derivative traders to position themselves for the upcoming weeks. Considering the risk of a deeper pullback if hopes for rate cuts diminish further, we should think about buying protective puts with a strike price close to the critical $4,400 support level. This strategy offers a cost-effective hedge against any surprises from the Fed or a stronger US dollar. It helps manage downside risk while we wait for more clarity. For those still optimistic about reaching the $5,000 range that major banks predict, bull call spreads could be an appealing choice. We can buy a $4,600 call while selling a $4,750 call to fund the position. This method limits potential gains but greatly reduces the upfront premium cost in this volatile market. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now