Gold prices hovered near record highs as traders focused on US economic data. After the Federal Open Market Committee (FOMC) meeting, gold lost ground because the Federal Reserve did not meet the market’s hopeful expectations for easing. This change in focus comes after projections of fewer rate cuts in 2025 and 2026, which contrasts with what the market anticipated.

Gold And Economic Data

Fed Chair Powell referred to a rate cut as a way to manage risks amid signs of a weakening labor market. Strong economic data could lead to higher interest rate expectations, which would affect gold prices. On the other hand, weaker data might boost gold. In the long run, gold is likely to keep rising due to falling real yields, although short-term interest rate expectations could trigger market corrections. From a technical standpoint, gold’s daily chart shows a new peak before retreating after the FOMC decision. Buyers must manage risks around key trendlines, while sellers may target a drop to the 3,120 level if US data is strong. The four-hour chart indicates a small upward trendline that supports a bullish outlook, with important support at 3,615. The one-hour chart reveals a 3,672 swing level; if this is crossed, buyers might aim for new highs, while sellers focus on support around 3,615. Since gold has pulled back from its all-time highs after the recent Fed meeting, the market is now closely watching economic data. Expectations for interest rate cuts have softened. The immediate risk is a correction if upcoming US economic reports show strength. This focus on data is crucial, as recent figures challenge the idea of a weakening economy. The August 2025 CPI report, released last week, came in slightly higher than expected at 3.4%. Additionally, the August Non-Farm Payrolls added a solid 210,000 jobs, beating forecasts. This suggests the Fed has little reason to speed up rate cuts, which could put downward pressure on gold in the short term.

Trading Strategies And Market Volatility

For traders assessing the upcoming weeks, buying put options with strike prices below the $3,615 support level may be wise. This allows for potential profit if prices drop towards the major trendline due to another strong inflation or jobs report. This strategy offers a way to manage risk while positioning for a potential shift towards higher interest rates. Conversely, if economic data weakens unexpectedly, a fast rally may occur. To prepare for this scenario, traders should monitor the key $3,672 resistance level. A strong break above this level could signal the time to enter bullish positions, such as buying call options, to take advantage of a move toward new all-time highs. It’s also important to watch the CBOE Gold Volatility Index (GVZ), which has climbed to 18.5, indicating greater market uncertainty. A similar trend was observed in 2022 when the Fed’s hawkish stance initially depressed gold prices before market focus shifted. The current high volatility makes option spreads a smart strategy for managing costs while positioning for significant price movements. The key area to keep an eye on is the support around the $3,615 level and the broader upward trendline. A sustained break below this zone would likely confirm a deeper correction. This would signal that bearish trading strategies could be more effective. Create your live VT Markets account and start trading now.

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