Gold (XAU/USD) has been rising for five days, exceeding $4,200. This increase is due to a weaker US Dollar as confidence returns to the market following the resolution of the US government shutdown, which also contributed to rising gold prices. Technical analysis points to positive momentum, suggesting that gold could reach its record high of $4,380. If it breaks above $4,220, it will signal strong growth, overcoming the previous resistance from October. However, if it pulls back, support can be expected around $4,150 or lower at $4,100 and $4,050.

Gold As A Safe Haven

Gold has always been a safe-haven asset and a reliable store of value, commonly used to protect against inflation and currency declines. Central banks often buy gold to enhance economic stability by diversifying their reserves. In 2022, they purchased 1,136 tonnes of gold—the highest annual total on record. Gold’s price typically moves opposite to the US Dollar and US Treasuries. When the Dollar weakens, gold tends to increase in value, especially during times of geopolitical uncertainty or fears of recession. Lower interest rates boost gold prices, while a strong Dollar can hold them back, since gold is priced in dollars. Recently, as of November 13, 2025, gold rallied to around $4,310, nearing record highs. This current price movement indicates that the market is stabilizing before its next move after the earlier rise driven by a softer dollar.

Central Bank Demand

The dollar’s weakness that started the recent rise continues today, with the Dollar Index (DXY) at 98.5 amid a slowing US economy. The Federal Reserve has reduced the Fed Funds Rate twice this year to 3.75%, making gold more attractive. Lower interest rates decrease the opportunity cost of holding non-yielding gold. Central banks have not slowed their gold purchases since 2022’s record of 1,136 tonnes. The World Gold Council reports that they have added about 800 tonnes to their reserves by the third quarter of this year, particularly from emerging markets. This steady demand helps support gold prices and limits potential declines. With gold closely following its all-time high of $4,380, implied volatility in the options market is rising. Traders might consider buying call options to speculate on a breakout, which would allow them to limit risk while capitalizing on potential upward movement. The earlier bullish trend suggests that if this key level is broken, it could happen quickly. For those anticipating a longer consolidation period, selling out-of-the-money puts below the strong support around $4,220 might be a good strategy to earn premiums. This approach leverages the higher volatility while assuming that strong fundamentals will keep prices from dropping significantly. It’s important to stay alert for any unexpected hawkish signals from central banks, as these could challenge this positive outlook. Create your live VT Markets account and start trading now.

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