Gold has risen by $38, reaching $3681, which is close to its pre-FOMC level. It is now just $20 shy of its all-time high. This week has been tough for gold due to a hawkish Federal Reserve decision and increasing Treasury yields. However, there has been a surge in buying activity that has contributed to today’s gains.

Focus On Geopolitical Factors

The bigger picture for gold is not primarily about Federal Reserve policies or inflation. Instead, attention is shifting toward changes in global trade and geopolitical dynamics. Gold’s strong rebound to $3681, despite the Fed’s tough stance, shows that the market is looking beyond short-term interest rate changes. The significant buying during the dip indicates there is strong demand that isn’t easily disturbed. This stability suggests traders should keep an eye on what is driving these movements. The main factor is the ongoing disruption in global trade and political structures, accelerating since the early 2020s. Central bank activity supports this, as seen in a report from the World Gold Council in mid-2025, which noted that central banks added over 800 tonnes to their reserves this year. This shift represents a move away from fiat currencies amid rising geopolitical tensions. Additionally, the US debt-to-GDP ratio has exceeded 130%, raising concerns about long-term confidence in the dollar. Market anxiety is evident, as the VIX index has been consistently above 18 for most of the year. These circumstances do not favor stability or riskier assets in the long run.

Derivative Trading Strategies

For those trading derivatives, a key strategy should be to prepare for a breakout above the all-time high near $3701. Buying out-of-the-money call options for the upcoming months is a cost-effective way to leverage this momentum. The aim is to benefit from a quick rise as attention on geopolitical risks grows. Another approach is to invest in long-term volatility through straddles, which profit from significant price movements in either direction. This strategy bets on the idea that instability will increase, leading to sharp and unpredictable price swings. Given the ongoing global tensions, a sudden surge in volatility seems more likely than a prolonged period of stability. Looking back to the 1970s, we see a similar situation where the collapse of the Bretton Woods system and geopolitical shocks triggered a lengthy rally in gold. That bull market was driven not by a single decision from the Fed but by a fundamental reassessment of money and sovereign risk. We believe we are experiencing a comparable structural shift today. Create your live VT Markets account and start trading now.

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