In the European morning on September 10, 2025, gold prices rose by 0.7% to $3,650.03. The US dollar was stable, indicating market steadiness, while rising geopolitical concerns emerged as Russian drones crossed into Poland. The President of the European Union urged for more sanctions on Russia, and the recent US-EU trade agreement received positive feedback. US mortgage applications increased by 9.2%, compared to a prior decline of 1.2%. In the currency market, the Australian dollar led gains, while the Canadian dollar lagged behind. European equities rose, and S&P 500 futures climbed 0.4%.

Gold And Market Trends

US 10-year yields saw a slight uptick, with WTI crude oil and Bitcoin each rising by 0.9% and 0.7% respectively. The market session was relatively quiet, with the major currencies, EUR/USD and USD/JPY, holding steady at around 1.1705 and 147.45. European stocks followed an upward trend along with US futures, primarily fueled by the tech sector. Precious metals like gold and silver continued to attract attention, with gold’s rebound and silver rising by 0.6% to over $41. Currency movements were muted as traders awaited upcoming US economic data, especially the PPI and CPI figures. There’s a noticeable gap between the calm in the stock market and pressing geopolitical events in Eastern Europe. The downing of Russian drones by Poland, a NATO ally, marks a significant escalation that the financial markets may not be fully anticipating. As key US inflation data approaches in the next day, market volatility is expected to increase sharply. The market’s predictions for future volatility seem too low given the current situation. The CBOE Volatility Index (VIX) hovers near a historically low level of 14, indicating a sense of complacency among equity investors. It might be wise to consider purchasing VIX call options or options on other volatility indices to prepare for potential market shocks, whether from an inflation spike or a Russian reaction in Poland.

Hedging Opportunities

This calm in stocks, with S&P 500 futures trending upward, offers a clear hedging opportunity. The market appears to be overlooking lessons from February 2022, when geopolitical events caused a rapid decline. Acquiring put options on the S&P 500 or the Nasdaq 100 could provide a direct and cost-efficient way to protect against any sudden shift in market sentiment. Gold is acting as a true indicator of risk, approaching its all-time high near $3,650. While it may seem pricey, any further military escalation could trigger a significant rush to safety, driving gold prices even higher. Employing call option spreads on gold allows for betting on this potential rise while defining risk if tensions ease. The WTI crude oil price at about $63 per barrel stands out, ignoring the new threats to European stability. Oil surged past $120 a barrel in 2022 due to initial supply disruption fears, making the current price appear unsustainably low if the conflict escalates. Buying long-dated call options on crude oil seems a sensible hedge against the market reassessing this heightened supply risk. Tomorrow’s US CPI data is another significant catalyst that could disrupt the market’s calm. With core inflation stubbornly above 3.5% for much of 2025, a higher-than-expected reading could push the Federal Reserve to take action, triggering a sharp sell-off in stocks and bonds. A straddle option on major currency pairs like EUR/USD could capture any large movements expected from this data release, regardless of direction. The bond market is also sending mixed signals, with the 10-year Treasury yield at 4.091%. A serious escalation in Europe would likely lead to a flight to the safety of US bonds, causing this yield to drop sharply. Conversely, a hot CPI report would send yields higher, so it’s wise to be prepared for significant rate movements in the coming weeks. Create your live VT Markets account and start trading now.

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