The core Personal Consumption Expenditures (PCE) Price Index in the United States dropped from 2.8% to 2.7% in October. This important measure shows changes in consumer prices, excluding food and energy costs. Gold prices have recently soared to record highs, exceeding $4,900 per troy ounce. This increase comes as the US Dollar weakens, although global market sentiments are improving.

Crypto Market Volatility

The crypto market is volatile, with Bitcoin trading just above $90,000. However, selling pressure from Exchange-Traded Funds (ETFs) is affecting Bitcoin and other cryptocurrencies, like Ethereum, which is around $3,000. In the foreign exchange market, the EUR/USD is stable near 1.1750, benefiting from eased US-EU trade tensions and a weaker US Dollar. At the same time, GBP/USD is rising towards 1.3500, supported by selling pressure on the Greenback. Amid these developments, former President Donald Trump has decided to drop proposed NATO tariffs, easing concerns over the Greenland dispute. Cooling Core PCE data from October 2025, showing 2.7%, continues to shape market expectations. We anticipate that the Federal Reserve will feel pressured to keep interest rates steady. Current Fed funds futures indicate an over 85% likelihood of no changes in the upcoming meeting.

US Dollar and Interest Rate Outlook

This situation will likely keep the US Dollar low, a trend we expect to continue in the coming weeks. We plan to buy call options on currency pairs like EUR/USD and GBP/USD to capitalize on potential gains while managing our risk. We observed a similar trend in late 2023 when the Dollar Index (DXY) fell nearly 5% in just two months as rate hike expectations disappeared. Gold’s rise to almost $4,900 is noteworthy, but it appears more related to the weak dollar than actual market fears. This makes gold susceptible to a rebound in the dollar, so we’re considering using covered calls on gold futures to earn income while maintaining our long positions. This approach allows us to profit if gold prices stay stable or increase slightly. With recent improvements in US-EU trade relations concerning Greenland, implied volatility has decreased. The CBOE Volatility Index (VIX) is now around 13.5, which is historically low, making it an affordable option to buy protective put options on the S&P 500 as a hedge against unexpected market events. We recall that periods of low volatility, like those in 2017, do not last indefinitely. In the cryptocurrency market, the selling pressure on Bitcoin ETFs at the $90,000 mark indicates that major investors are taking profits. This could signal short-term weakness or a consolidation phase for the asset. Thus, a bear call spread on Bitcoin futures could be a good strategy for those expecting a dip to around $85,000. Create your live VT Markets account and start trading now.

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