Gold prices have made a slight gain, rising over 0.51% and reaching a seven-week high of $4,353. XAU/USD is currently at $4,302 as traders react to comments from Federal Reserve officials. Concerns about high inflation, limited economic data, and geopolitical tensions create uncertainty. The number of jobless claims in the U.S. has increased, reinforcing the Federal Reserve’s cautious approach. Meanwhile, peace talks between Russia and Ukraine have stalled.

Gold Market Dynamics

Gold has largely ignored the comments from Fed officials, while some have called for stricter monetary policy due to inflation. U.S. Treasury yields have gone up, but real yields have dropped slightly, which supports gold prices. The U.S. Dollar Index is steady at 98.35. Technical analysis suggests that gold prices could rise, especially if XAU/USD moves above $4,353. Central banks, which hold the most gold, have significantly increased their reserves, showing that gold is seen as a safe asset and a hedge against inflation. Gold usually moves in the opposite direction of the U.S. Dollar and Treasuries; it tends to rise when the dollar weakens or during market downturns. Gold prices also react to geopolitical instability and changes in interest rates. As of December 13, 2025, market conditions seem favorable for gold. The uncertainty within the Federal Reserve—where officials disagree on inflation and interest rates—creates a supportive environment for safe-haven assets like gold. This lack of clear direction from the Fed is a major reason for holding gold.

Gold Price Strategies

We’ve seen this situation before, especially in late 2023, when expectations of a Fed pivot led to major volatility and a rally in precious metals. The current disagreement within the Fed means that upcoming economic data, particularly about inflation and jobs, may cause significant price swings. For derivative traders, this suggests strategies that benefit from rising volatility, such as long straddles or strangles ahead of major data releases. Ongoing geopolitical tensions also add support to gold prices. The stalled peace talks between Russia and Ukraine are a big factor, as prolonged conflict raises global risk. At the beginning of the conflict in early 2022, gold prices increased by more than 6% in just a few weeks, highlighting how quickly prices can react to geopolitical events. Recent economic data, like last Thursday’s rise in weekly jobless claims to 236,000, supports the Fed’s dovish stance. A weakening labor market makes it difficult for the Fed to keep a restrictive policy, which is positive for non-yielding assets like gold. This trend, along with falling real yields, reduces the cost of holding gold compared to interest-bearing government bonds. From a tactical perspective, the upward trend in gold prices looks strong, with prices near their all-time high of $4,381. Buying call options with strike prices at or above this level could be a smart way to take advantage of the potential for new highs. This strategy lets you join a price rally while clearly defining your maximum risk. However, the Relative Strength Index (RSI) moving into overbought territory suggests a possible short-term pullback, even within a larger upward trend. Traders who already hold long positions might consider buying put options with strike prices below the $4,285 support level. This can help protect profits against a temporary price drop. Create your live VT Markets account and start trading now.

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