Gold briefly went above $3,500 today before dropping slightly below that mark. It saw a 0.6% increase as traders look forward to a potential breakout. This price movement comes after several months of stability since May, with technical indicators now aligning in favor of an upward move. In April, gold reached $3,500 but couldn’t hold that level. Traders have since been waiting for another chance. With recent challenges to the 100-day moving average, attention is now on breaking through the $3,500 resistance again this week.

Factors Affecting Gold Prices

Several factors are driving gold prices up. These include: – Anticipation of Federal Reserve easing – Central banks buying gold – ETF trading activity – Concerns about the dollar losing value Stagflation might also push prices higher. While tariffs haven’t yet significantly impacted U.S. inflation, inflation expectations have risen since April, peaking in July. If tariff effects become noticeable, gold could rally even more. September often poses challenges for gold historically. However, U.S. economic data and actions from the Federal Reserve may influence this trend. With gold testing the important $3,500 resistance level seen earlier this year, it’s wise to consider strategies for a possible breakout. Buying call options with strike prices slightly above this level, such as $3,550 or $3,600 for October, could allow you to profit from a quick upward movement. This strategy keeps your initial risk limited to the cost of the options.

Current Economic Climate and Trading Strategies

The situation for gold looks increasingly positive, boosting our confidence in this upbeat outlook. The World Gold Council recently reported that central banks have been buying aggressively, adding over 220 tonnes to global reserves in Q2 2025. Additionally, gold-backed ETFs saw inflows of over $2.5 billion in August, showing strong demand from both official and private sectors. We are also closely watching stagflationary pressures. The latest U.S. CPI report for August 2025 showed inflation rising to 3.4%. In contrast, recent manufacturing data indicates slower growth, making Fed easing more likely. The market currently anticipates a 65% chance of a rate cut by year’s end, which would weaken the dollar and support gold prices. However, we must consider gold’s historical trend of poor performance in September, observed in about 60% of the last 20 years. To safeguard against a potential false breakout, a bull call spread may be a smart move, as it lowers initial costs by selling a higher-strike call option. Alternatively, traders with existing long positions could purchase protective puts below the recent support level of the 100-day moving average. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now