In October, US personal income increased by 0.3%, which is a bit slower than the previous month’s growth of 0.4%. Gold prices have hit a record high of over $4,900 as the US Dollar weakens, following an improvement in global risk appetite.

Currency Market Dynamics

The EUR/USD exchange rate is stabilizing around 1.1750 as tensions between the US and EU ease. At the same time, the GBP/USD pair is seeing a recovery, nearing two-week highs of about 1.3500 due to ongoing selling of the USD. Bitcoin has just topped $90,000 amidst strong ETF selling pressure. Ethereum is trading close to $3,000, and XRP is holding steadily above $1.90, showing two consecutive days of gains despite recent market fluctuations. US geopolitical tensions improved when a proposed 10% tariff increase on NATO countries was withdrawn. This move has helped reduce broader geopolitical tensions, positively impacting market conditions and various assets. The slowdown in US personal income growth in October 2025 was an early indicator for the dollar. Recent data supports this trend, with Q4 2025 GDP growth at only 1.9%, and December’s jobs report showing the slowest wage growth in over a year. Traders may want to take positions that benefit from ongoing US dollar weakness, like buying puts on dollar index futures. Gold’s rise towards $5,000 per ounce is mainly driven by the dollar’s weakness rather than a typical flight to safety. This is an important difference, as this rally is happening even when risk appetite improves. Central bank buying remained strong in Q4 2025, providing solid support for bullion and suggesting that buying call options on gold remains a practical strategy.

Market Volatility and Central Bank Policy

Following the de-escalation of the NATO trade dispute late last year, market volatility has significantly decreased. The VIX is currently around 13.5, indicating a historical trend of complacency among investors. This creates a low-cost opportunity to buy protective puts on major equity indices as a safeguard against unexpected events. We can see this in the currency markets, as EUR/USD and GBP/USD test important highs. The European Central Bank has indicated it will keep interest rates steady, creating a divergence with the Federal Reserve, which is expected to cut rates by the third quarter of 2026. This situation favors long positions in euro and sterling futures against the US dollar. In the crypto markets, the heavy selling pressure from Bitcoin ETFs continues to be a significant challenge. Although Bitcoin remains above $90,000, this selling pressure makes it hard for prices to break out significantly in the short term. This environment is ideal for derivative traders looking to sell call options and collect premiums by capitalizing on a range-bound price movement. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now