Gold as a Safe-Haven Asset

Gold is widely regarded as a safe-haven asset, helping to protect against inflation and currency devaluation. In 2022, central banks purchased a significant amount of gold—1,136 tonnes, valued at around $70 billion—to boost their reserves. The price of gold typically moves in the opposite direction of the US Dollar and US Treasuries, as well as riskier assets like stocks. Geopolitical events and changes in interest rates impact gold prices, which often rise when the US Dollar weakens. On January 14, 2026, gold prices are showing strength, reflecting a steady upward trend that is likely to continue. The international price hovers around $4,650, driven by expectations of rate cuts from the Federal Reserve and a generally weaker US Dollar. This creates a positive outlook for gold in the near term. The recent cooling of inflation also plays a key role. In December 2025, US CPI dropped to 2.5%. Markets now see a high chance—over 70%—that the Fed will cut rates by their March meeting. Lower interest rates make holding non-yielding assets like gold more appealing. This trend is evident in the bond market, where the 10-year US Treasury yield fell below 3.5% late last year, making gold more attractive. Upcoming US Retail Sales data will be important; a weak report could reinforce the case for an earlier rate cut, pushing gold prices higher. Traders should closely monitor this release for potential market volatility.

Central Banks and Gold Demand

Central banks continue to drive demand for gold, a trend that gained momentum after record purchases in 2022. In 2025, global central banks added over 800 tonnes to their reserves, with the People’s Bank of China and the Reserve Bank of India leading the charge. This sustained demand creates a solid price floor for gold. For derivative traders, this suggests a favorable position for upcoming weeks. Buying call options on gold futures (GC) or gold-backed ETFs can be a smart way to profit from the anticipated price increase. Bullish call spreads are another option to define risk while aiming for gains. As economic data is released, implied volatility may rise, presenting additional opportunities. Traders expecting a sharp price move after the retail sales report—regardless of direction—might consider long straddles or strangles. This approach allows for profits from significant price swings as the market reacts to new information. Lastly, it’s essential to see gold as a hedge against riskier assets. With ongoing worries about a potential economic slowdown leading the Fed to consider rate cuts, the equity markets may face challenges. Using gold futures or options as a hedge against long equity portfolios could be a wise strategy in the coming weeks. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now