The US Commodity Futures Trading Commission reported a drop in gold net positions, falling to 227,600 from 2,312,000. This change shows how traders are adjusting their positions in the gold futures market. In currency news, the EUR/USD ended the week at about 1.1640, losing 0.7% as the US Dollar gained strength. The GBP/USD fell below 1.3400, testing its 200-day Simple Moving Average, reflecting the ongoing impact of the strong US Dollar.

Gold Prices Rise Amid Risk Aversion

Gold prices surged above $4,500 per troy ounce, driven by risk aversion, despite the strong US Dollar and rising Treasury yields. In the crypto market, Bitcoin held steady at $90,000, while Ethereum stayed above $3,000, influenced by declining institutional demand. Next week, the US Consumer Price Index is expected to challenge the strong US Dollar influenced by geopolitical events. A potential ruling by the US Supreme Court on tariffs could also impact the markets, and a busy data schedule is coming up. XRP is under pressure, trading below the 50-day EMA due to weakening retail demand. Open Interest in futures has dropped to $4.15 billion, indicating a further decline in retail participation in the XRP market. With gold reaching $4,500, we noticed a troubling sign in the latest trader data. Non-commercial net long positions have plummeted, suggesting large investors are selling into the rally. This trend indicates the current price increase might be misleading, making it wise to buy put options on gold futures to protect against a sharp downturn.

Historical Patterns and Market Reactions

This situation resembles past market peaks we saw in 2025, where prices rallied briefly while institutional money quietly exited. Historically, rapid position liquidation by managed money often leads to a significant correction within weeks. The risk aversion driving gold higher seems vulnerable and could fade quickly, putting late buyers at risk. The US Dollar remains the key player, and we expect this trend to continue with next week’s CPI report. Given the mixed labor data, a high inflation number would likely strengthen the Federal Reserve’s hawkish stance. We should consider buying puts on EUR/USD futures or calls on the Dollar Index to prepare for this scenario. We must recall last year’s inflation struggles, where even minor CPI increases led to significant market swings. The US annual inflation rate was stubbornly at 3.4% by the end of 2024, and the market is highly sensitive to any indications that inflation isn’t under control. This history suggests a strong reaction to next week’s data is probable, opening opportunities in the options market. In the crypto world, declining institutional interest in Bitcoin and Ethereum raises major concerns, although prices remain high. Market fears and reduced futures open interest show low conviction, increasing the risk of a downturn. We see this as an opportunity to buy put options to safeguard long holdings or speculate on a correction toward more stable price levels. Create your live VT Markets account and start trading now.

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