**Lower Fed Rates Favor Non-Yielding Assets Like Gold** The US Dollar Index is currently low at 99.55. A stopgap bill recently approved by the Senate has put some pressure on the Dollar, leading investors to favor riskier assets. Gold is finding support near its 20-day EMA, at about $3,981.00. The 14-day RSI indicates a sideways trend, with prices fluctuating between 40.00 and 60.00. The high of $3,888.62 on October 28 is a crucial support level for Gold. Its all-time high of $4,380 is a significant resistance point. Gold is seen as a safe place to store wealth during uncertain times. Central banks hold the most Gold, adding 1,136 tonnes valued at $70 billion in 2022. Gold typically rises when the US Dollar and Treasuries fall. As the Dollar weakens, Gold prices usually increase, especially with lower interest rates. **Potential Strategies for Traders** With Gold approaching $4,080, this is largely due to expectations of another Federal Reserve rate cut in December. The market is estimating a 64.6% chance of this cut, which would mark the third consecutive reduction. This trend signals a clear easing cycle, making it a supportive environment for non-yielding assets. The latest Consumer Price Index (CPI) data for October 2025 shows inflation cooling to 2.8%, indicating that the Fed has room to act. Historically, a similar pattern occurred during the 2019 easing cycle, leading to a significant Gold rally after the first rate cuts. The weaker Dollar, trading around 99.55 on the DXY, is also making Gold more appealing to foreign investors. For derivative traders, a bullish but cautious approach is advisable ahead of the December meeting. The Relative Strength Index (RSI) shows a sideways trend, meaning a big price move isn’t guaranteed just yet. A bull call spread could be a smart strategy, like buying a December $4,100 call option while selling a $4,300 call option to cut costs. This approach allows traders to benefit from a price increase toward the all-time high near $4,380 while controlling risk if prices stay stable. On the downside, the support level at around $3,981 is critical. If Gold drops below this, it could indicate that upward momentum is waning. Additionally, central banks are maintaining their strong buying trend from 2022, with the World Gold Council reporting continued demand from emerging markets through Q3 2025. For traders holding long positions in futures, buying put options with a strike price below the October 28 high of $3,888.62 can serve as a cost-effective hedge. This protects against any unexpected hawkish moves from the Fed or a sudden recovery in the US Dollar. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now