**Gold Prices Set to Rise** Gold prices have surged to nearly $4,165 in early Asian trading. This rise is driven by increasing demand for safe-haven assets due to ongoing US-China trade tensions. Later on Wednesday, speeches from Federal Reserve officials, including Stephen Miran and Christopher Waller, are expected and could sway market views on interest rates. The US government’s proposed tariffs on Chinese goods and extra port fees are worsening the trade conflict, affecting global shipping and commodities. US Trade Representative Jamieson Greer has mentioned that tariffs could reach 100% on certain Chinese products, depending on China’s actions. The anticipated cuts to Federal Reserve interest rates are also making gold more appealing. Markets are expecting a 25 basis point cut in the next meeting, with another cut possible in December. Lower interest rates often increase the attractiveness of gold, as the opportunity costs of holding it decrease compared to other assets with no yield. Central banks have been boosting their gold holdings, buying 1,136 tonnes in 2022. This trend is tied to geopolitical uncertainties and economic strategies. Gold prices often move in the opposite direction to the US Dollar and risk assets, reacting to changes in currency value and interest rate policies. Gold prices fluctuate based on geopolitical stability, recession fears, and the US Dollar’s strength. Typically, a weaker Dollar raises gold prices, while a stronger Dollar can lower them because gold is priced in dollars (XAU/USD). **Safe Haven Asset in Demand** With gold prices nearing $4,165, the demand for safe havens is clearly rising ahead of significant event risks. The main catalysts include ongoing US-China trade tensions and strong expectations for a Federal Reserve rate cut this month. It’s important to position for continued upward momentum while watching out for possible sharp reversals based on Fed comments. The threat of 100% tariffs by November 1st sets a clear deadline that may support gold prices in the coming weeks. This situation serves as a serious trigger for market uncertainty, especially with new shipping fees already in effect. The geopolitical tension encourages maintaining bullish positions as a hedge against escalating trade conflicts. Market predictions now strongly favor a rate cut in October, which benefits non-yielding assets like gold. This view aligns with last week’s US inflation data showing the Consumer Price Index (CPI) stubbornly high at 3.8%, limiting the Fed’s ability to adopt a hawkish stance. Lower interest rates reduce the opportunity cost of holding gold, making it more attractive. For traders, this environment hints at increased implied volatility, making options strategies particularly valuable. Buying call options that expire in November or December seems wise for capturing potential gains while managing risk from any unexpected hawkish comments from the Fed. Selling out-of-the-money put spreads could also be a way to collect premiums, believing that support for gold will stay strong. This trend is further supported by large purchases from official institutions, a pattern observed since record-breaking central bank buys in 2022. Recent World Gold Council data indicates that central banks added another 280 tonnes to their reserves in the third quarter of 2025. This steady demand from major players creates a strong foundation for gold prices. The US Dollar’s decline, now at its lowest in three months, also boosts gold prices. Notably, we are seeing significant investments in gold-backed ETFs, with net inflows exceeding $4 billion since September 1st. This reflects both institutional and retail investors increasing their exposure, anticipating further price gains. Create your live VT Markets account and start trading now.

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