Gold has seen a strong rise recently, continuing its long upward trend that started after the pandemic when it was priced at $2000. It hit a record high of $3500 in April and has been consolidating for five months. Now, gold is on the rise again, partly due to expected changes in US fiscal and monetary policies. Analysts predict the next target for gold is $4000, based on the recent trading patterns. A small drop in price may actually present a good buying opportunity.

Key Factors Driving the Market

Several key factors are influencing the market, such as shifts in global trade and significant geopolitical events involving leaders from China, India, and Russia. Although the market typically struggles for gold at this time of year, we expect conditions to improve in November. Patience may be required, as there may be more price fluctuations or a return to previous price levels. Since gold was priced at $2000, it has shown steady growth, and this trend seems unlikely to change. The recent rise above the five-month consolidation range is a crucial signal for investors. With the August 2025 jobs report showing weaker numbers for the third month in a row, the Federal Reserve is likely to speed up its easing policies. This shift in monetary policy, combined with the Congressional Budget Office’s prediction of a fiscal deficit over $2.5 trillion, is boosting interest in precious metals.

Improving Market Fundamentals

The market’s fundamentals are looking strong, especially with increasing de-dollarization around the world. Reports from the recent BRICS+ summit indicate that central banks in these countries collectively purchased a record 200 tonnes of gold in the second quarter of 2025. This rising institutional demand provides a solid support level for gold, meaning any price dips are likely to be short-lived. For traders, this is a prime time to invest in the push towards the $4,000 target. Buying out-of-the-money call options, like December’s $3800 or January 2026’s $4000 strikes, can offer a defined-risk way to take advantage of this potential upside. Yesterday’s brief drop to the $3550 level was a normal test of the breakout point, providing a great entry opportunity. After the 2008 financial crisis, we saw a similar pattern where monetary stimulus and government spending led to a lengthy bull market for gold. Open interest in COMEX gold futures has surged nearly 15% this week, indicating that new, larger market players are getting involved. These capital flows support the breakout and suggest we’re entering a significant upward phase. While September and October have often been unpredictable for gold, powerful underlying factors are likely to outweigh the usual seasonal trends. For those concerned about a possible false move, using bull call spreads can help manage the risk and reduce the cost of maintaining a position while waiting for the stronger months that usually start in November. This strategy allows us to stay in the trade through any potential price consolidations before moving higher. Create your live VT Markets account and start trading now.

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