Gold prices have reached new heights, now exceeding $4,700, driven by geopolitical tensions and a weaker US Dollar. Currently, Gold is trading around $4,725, just under its recent peak of $4,751. Market stability is at risk as tensions grow between the US and the EU over possible tariffs on European nations linked to Greenland. The EU has expressed concerns and threatened counteractions if tariffs are enacted, raising fears of a major trade conflict across the Atlantic.

Impact Of Protectionist Policies

Trump’s protectionist measures are rattling US market confidence, weakening the US Dollar and pushing investors toward safe-havens like Gold. Ongoing regional conflicts, such as the Russia-Ukraine war and tensions in the Middle East, are increasing geopolitical risks. The DXY Index has fallen for several days in a row, currently trading around 98.40, close to a two-week low. Several crucial events are on the horizon, including a Supreme Court decision on Trump’s tariffs and the possibility of a new Federal Reserve Chair being announced. Technically, Gold is showing positive momentum, with targets above $4,700 and possibly reaching $4,800. In contrast, the US Dollar has weakened against many currencies but remains strongest against the British Pound. With gold solidly above $4,700, the trend seems to be heading upward. Derivative traders should think about buying call options on gold futures or related ETFs to take advantage of this strong upward momentum. This approach offers a defined-risk method to aim for the psychological milestone of $4,800.

Weakness Of The US Dollar

The US Dollar’s significant weakness is key, with the DXY index struggling to stay above 98.40. This makes dollar-priced gold more appealing to international buyers and strengthens the safe-haven trend. Traders might also consider futures contracts as a strategy against the dollar, especially against the Swiss Franc and the Euro, which are performing relatively well. Market anxiety is rising, with the CBOE Volatility Index (VIX) recently surpassing 28, a level not consistently seen since the banking disruptions of 2024. This justifies using put options on major equity indices to hedge against the potential fallout from the US-EU trade conflict. The increasing premiums on these options indicate a higher demand for protective measures in portfolios. This rally is backed by more than just news, as recent Commitment of Traders reports show that large speculators are increasing their net-long positions in gold. This institutional influx adds to the record central bank purchases of gold seen in 2025, establishing a strong support level for the market. We see clear similarities to past geopolitical shocks, such as the early phase of the Russia-Ukraine war in 2022 when gold also surged amid global uncertainty. Historical performances during the 2019 trade conflicts offer valuable insights for the current situation. History indicates these trends can continue as long as the underlying tensions are unresolved. Upcoming US economic reports, including delayed inflation data, pose key event risks that will likely increase market volatility. Using short-dated or weekly options could be a smart way to make tactical moves around these releases. A weak inflation figure would likely be interpreted as reinforcing the Fed’s dovish stance, further boosting gold’s rise. Create your live VT Markets account and start trading now.

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