Gold approached $4,350 after updates from European central banks and U.S. inflation data. In the crypto market, Bitcoin aimed for a short-term breakout above $87,000 due to increased ETF inflows, while Ethereum maintained support at $2,800 despite some ETF outflows.

Ripple Market Situation

Ripple (XRP) traded between $1.82 and $2.00. Demand from retail investors was low, but it still held its key support level. The Bank of England’s mixed decision on rate cuts adds complexity to the overall financial outlook, which investors need to analyze carefully. Recent economic data shows a clear trend for the upcoming weeks. U.S. consumer inflation dropped to 2.7% in November, down from 3.1% in October 2025. This significant change is a major market influencer. Along with stable jobless claims averaging 221,000 over the past month, the case for the Federal Reserve to cut rates in the first quarter of 2026 looks stronger. In this environment, shorting the U.S. dollar seems appealing as we head into the new year. Fed funds futures indicate a 75% chance of a rate cut by March 2026, which could put further pressure on the dollar. Traders might consider buying puts on the dollar index or selling futures to benefit from this expected weakness.

European Central Bank Policy Divergence

On the other hand, the European Central Bank decided to hold rates while improving growth forecasts, signaling a clear policy divergence. This move pushed the EUR/USD above 1.1750, a level it hasn’t consistently reached since the summer of 2024. We recommend buying call options on the Euro for a defined-risk approach to this trend. The situation with the British Pound is more complicated due to the Bank of England’s split 5-4 vote on rate cuts. Although the GBP/USD has exceeded 1.3400 amid dollar weakness, this internal disagreement at the BoE could result in sharp price fluctuations. Traders may find opportunities in volatility plays, like long straddles on the currency pair, to navigate potential uncertainty in early 2026. Gold stands to gain from a weaker dollar and the expectation of lower interest rates. As it pushes towards $4,350 per ounce, its attractiveness as a non-yielding asset increases. We see potential for further gains and suggest traders consider call options on gold futures or related ETFs for leveraged exposure. Additionally, the CBOE Volatility Index (VIX) has dropped to 14.5, indicating strong market confidence in a soft economic landing. Historically, low volatility levels, similar to early 2024, can present value for those purchasing long-term protective puts on major stock indices. An unexpected economic disruption could quickly change risk assessment from these complacent levels. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now