**International Market Factors** Gold prices began to rise sharply in late August. This increase was driven by Trump’s efforts to shape US monetary policy towards a more lenient approach. This push has also lifted both gold and stock markets to new highs. Additionally, weak US economic data has led to expectations for lower interest rates and a weaker US dollar. Globally, the ongoing conflict in Ukraine continues to create market uncertainty. Although there was a productive meeting between the US and China, the anticipated effect on gold prices from trade talks has not happened, with no clear changes in tariffs. **Trade Strategies and Derivatives** As gold prices increase dramatically, traders should prepare for more upward movement and heightened volatility. The CBOE Gold Volatility Index (GVZ) has jumped to over 30, a level not seen since early 2024’s market unrest. In this environment, buying long-term call options, such as those for January 2026, offers a smart way to leverage potential gains while managing risk. The drive for a softer monetary policy is the main influence here, and the derivatives market reflects this strong expectation. Fed fund futures indicate a 90% likelihood of a 50-basis point interest rate cut at the next FOMC meeting in October. Similar expectations for rate cuts in late 2023 preceded substantial gold price rises. This outlook is supported by a weakening US dollar, which recently fell below the important 95.00 mark on the DXY for the first time in over two years. A softer dollar boosts gold prices. Therefore, we recommend using bull call spreads on gold futures to lower entry costs in this volatile environment. The ongoing conflict in Ukraine also solidifies gold’s status as a safe-haven asset, making aggressive short-selling less appealing. Furthermore, we’re noticing a significant rise in open interest for December 2025 (GCZ5) gold futures contracts, indicating that new investors are entering the market to benefit from this trend. This accumulation of positions shows strong bullish sentiment. For those managing larger portfolios, the simultaneous record highs in both stocks and gold create a unique hedging opportunity. Buying gold put options or even VIX calls can act as an affordable form of portfolio insurance. Should risk sentiment shift sharply, gold could soar further as investors seek safety, even if stocks start to decline. Create your live VT Markets account and start trading now.

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