Understand What Hedging Is

In this article, we will explore the concept of hedging in trading—an essential risk management strategy used by traders and investors to safeguard their positions against potential losses. We will explain how hedging works, why it is used, and the various strategies that traders employ to minimize risks in uncertain market conditions.

What is Hedging?

Hedging is a risk management strategy used by traders and investors to protect their positions from potential losses. It involves taking an opposite position in a related asset, aiming to offset any negative price movements in the original investment. Hedging works like insurance for your investments. Just as car insurance protects you against accidents, hedging shields your investments from market fluctuations. However, unlike insurance, hedging does not guarantee a return but aims to reduce exposure to potential losses.

While hedging can help reduce risks, it may also limit the potential for significant gains. Traders and investors use hedging techniques to safeguard their portfolios against unexpected market events, economic shifts, or other unpredictable factors that might affect the value of their holdings. The goal is to maintain a more stable financial position, even in uncertain or volatile market conditions.

How Does Hedging Work?

Hedging works by creating a balance between positions in different assets. For example, if a trader holds a position in a particular asset and anticipates that its price might fall, they can take an opposite position, usually in a related market. The goal is that any loss in one position will be offset by gains in the other. There are several ways to implement a hedge, including using derivatives like options, futures, and CFDs, or by holding an opposite position in a related asset.

Example: A trader holding a long position in the EUR/USD pair might decide to hedge by buying a put option on the same currency pair. If the price of EUR/USD falls, the gain from the put option offsets the loss on the original position.

Discover the top 8 most traded currency pairs.

The Reason Why Traders Hedge

Traders hedge for various reasons, but the primary one is to reduce risk. Markets are inherently unpredictable, and the desire to minimize losses is a key factor in risk management. By hedging, traders and investors protect themselves from potential adverse price movements that could impact their positions. Hedging acts as a safety net, ensuring that a potential loss in one asset is offset by gains in another. This is especially true in volatile markets, where price swings can be dramatic.

Here are 5 key reasons why traders and investors hedge:

To Reduce Risk

The primary reason for hedging is to minimize risk. Markets can experience unpredictable fluctuations, and hedging helps to reduce the exposure to those fluctuations. For example, a trader may take an opposite position in a related asset to protect themselves from a downturn in the market. This way, any loss in one position is offset by gains in the hedge.

To Protect Against Market Volatility

In volatile markets, prices can change dramatically over short periods. Hedging helps traders safeguard their portfolios from large, unpredictable swings. Economic announcements, geopolitical events, or sudden market movements can cause instability, and hedging helps reduce the financial impact of these uncertainties. It allows traders to maintain stability, even in turbulent conditions.

To Lock in Profits

Hedging is also used to lock in profits. When a trader’s position has gained significantly but the market outlook remains uncertain, hedging ensures that the profits are not wiped out by an unexpected reversal. For instance, if a trader holds a profitable position in a currency pair but fears the market might reverse, they can hedge to secure the gains they’ve already made, minimizing the risk of loss.

To Manage Exposure Across Multiple Asset Classes

Large institutional investors, such as mutual funds or pension funds, often deal with a diversified portfolio of assets. Hedging allows these investors to manage risk across different asset classes (stocks, bonds, commodities, etc.) and ensures that a loss in one area does not drastically affect the overall portfolio. This broad approach to risk management is crucial for institutions with complex holdings and exposure to various markets.

To Hedge Against Inflation Risks

Inflation can erode the purchasing power of money over time, impacting the value of assets. Investors use hedging strategies to protect their portfolios from inflationary pressures. For example, commodities like gold or inflation-protected securities (TIPS) can be used as a hedge against inflation. By hedging against inflation, traders and investors ensure that their assets retain their value, even as inflation drives up the cost of goods and services.

Benefits of Hedging

To Reduce Risk

The primary function of hedging is to minimize the risk of unfavorable price movements. It protects traders from large losses and ensures they are not overly exposed to any single market change.

Protection Against Market Volatility

Hedging acts as a cushion against market fluctuations, reducing the potential for significant losses. It helps protect positions from large, unpredictable price swings, especially in volatile markets.

Stability

By minimizing the effects of adverse market movements, hedging provides stability to a portfolio. This ensures more predictable returns and helps traders manage uncertainty in the market.

Locking in Profits

When a position has gained significantly but market conditions are uncertain, hedging allows traders to secure profits. It prevents a profitable position from being undone by unfavorable market movements.

Risks of Hedging

Costs

Hedging involves additional costs, such as transaction fees, margin requirements, and other associated expenses. These costs can erode potential profits, especially if the hedge is not implemented effectively.

Reduced Profit Potential

Since hedging is designed to limit risk, it can also limit the possibility of large gains. Hedging may result in missed profit opportunities if the market moves in favor of the original position.

Overhedging

Overhedging occurs when traders hedge too much, which can reduce potential profits and create unnecessary complexity. It can also expose traders to multiple risks that may counteract the intended benefit of hedging.

Complexity in Execution

Hedging requires a deep understanding of market conditions, tools, and strategies. If not executed properly, it can lead to errors and confusion, resulting in losses or ineffective risk management.

What are the Popular Hedging Strategies?

Hedging is a vital tool in a trader’s or investor’s arsenal, offering protection against the unpredictable nature of the markets. There are several strategies traders use to manage risk, each suited to different market conditions and asset classes. Understanding the most popular hedging strategies can empower traders to make more informed decisions and safeguard their portfolios against adverse market movements.

1. Direct Hedging

Direct hedging involves taking opposite positions in the same market, typically using derivatives like options, futures, or CFDs. For example, if a trader holds a long position in a commodity like oil, they might enter a short futures position to offset any potential loss if oil prices fall. This method allows traders to protect their current position directly without moving into different asset classes.

2. Pairs Hedging

Pairs hedging involves taking opposing positions in two related assets. This can often be seen in currency markets, where traders might hold long and short positions in different currency pairs to mitigate the risk of price fluctuations. For example, a trader might go long on EUR/USD while simultaneously shorting GBP/USD. This creates a hedge by offsetting the risk between two correlated currencies.

Discover what are the major currency pairs. 

3. Trading Safe Havens

Gold is one of the most popular safe-haven assets in hedging strategies. During periods of market volatility or economic uncertainty, traders often turn to gold because it tends to retain or even increase in value when other assets, like stocks or currencies, decline. As a tangible asset, gold is viewed as a reliable store of value, offering protection against inflation and geopolitical tensions. By incorporating gold into their portfolios, traders can hedge against losses in more volatile markets, helping to stabilize their investments in times of crisis.

Discover 10 reasons why gold is so valuable. 

What are the Different Ways to Hedge?

There are several ways to hedge positions in financial markets, each offering different levels of protection and flexibility. Here are some of the most commonly used methods:

CFDs (Contracts for Difference)

CFDs allow traders to take positions that mirror the price movements of an underlying asset without owning the asset itself. By using CFDs, traders can easily open both long and short positions, providing flexibility to hedge against price fluctuations. If a trader holds a position in an asset that might decline in value, they can open a short CFD position to offset potential losses.

Options

Options provide traders the right, but not the obligation, to buy or sell an asset at a predetermined price before a set date. By purchasing put options, traders can protect themselves against price declines in assets they hold. This hedging method allows for flexibility while limiting the downside risk, making it a popular choice for managing exposure.

Futures

Futures contracts are standardized agreements to buy or sell an asset at a future date for a fixed price. Traders use futures to lock in prices and hedge against price movements in commodities, stocks, or indices. For example, a trader holding a long position in a commodity might use futures contracts to protect against a potential price drop, securing a favorable selling price in the future.

Inverse ETFs

Inverse exchange-traded funds (ETFs) are designed to profit from declines in the value of an underlying index or asset. These ETFs move in the opposite direction of the market, allowing traders to hedge against downward trends. Inverse ETFs can be an efficient way to protect portfolios from market downturns without having to short-sell the underlying assets.

Each of these methods offers different benefits and risks. The right hedging strategy depends on the trader’s objectives, risk tolerance, and the market conditions they face. By using these tools, traders can effectively reduce their exposure to risk and protect their portfolios.

Conclusion

Hedging is an essential strategy for managing risk and protecting positions in unpredictable markets. By taking opposite positions or using various financial instruments like CFDs, options, and futures, traders can safeguard their investments from adverse market movements. While hedging can reduce the potential for large losses, it may also limit the opportunity for substantial gains. Ultimately, the right hedging strategy depends on the trader’s goals, risk tolerance, and the prevailing market conditions. Understanding how to effectively implement hedging techniques is key to maintaining a stable portfolio and minimizing exposure to risk.

Hedge Today with VT Markets

At VT Markets, we provide a regulated and reliable trading platform with a range of tools to help traders implement effective hedging strategies. With access to industry-leading platforms like MetaTrader 4 and MetaTrader 5, you can execute your hedging techniques with precision and flexibility. Whether you’re using CFDs, options, or futures, our platform offers the resources needed to manage risks effectively. Plus, with our demo account, you can practice your hedging strategies in a risk-free environment before trading with real capital.

Start trading and hedging with VT Markets today. Open your account and take control of your risk management with our powerful tools!

Frequently Asked Questions (FAQs)

1. What is hedging in trading?

Hedging in trading is a risk management technique used to protect investments from potential losses by taking an opposite position in a related asset. It’s like buying insurance for your trades to minimize the impact of adverse price movements.

2. How does hedging work in forex?

Hedging in forex involves taking positions in related currency pairs to offset the risks of unfavorable exchange rate movements. For example, if you hold a long position in EUR/USD, you can hedge by taking an opposite position in another currency pair, such as GBP/USD, to reduce your exposure to fluctuations.

3. What are the popular hedging strategies?

Popular hedging strategies include direct hedging, where traders take opposite positions in the same asset, pairs hedging, which involves trading correlated assets, and safe-haven trading, where assets like gold are used to protect against market volatility.

4. Are there any risks involved in hedging?

While hedging helps minimize risk, it doesn’t eliminate it. Hedging strategies come with costs, such as transaction fees and margin requirements. Additionally, overhedging or improperly executed hedges can reduce potential profits and lead to unnecessary complexity.

5. Can I hedge with VT Markets?

Yes, VT Markets provides the tools and platforms, including MetaTrader 4 and MetaTrader 5, to help traders hedge effectively using various financial instruments like CFDs, options, and futures. Our platform allows you to manage your risk strategies with precision.

6. Can hedging guarantee a profit?

No, hedging does not guarantee profits. While it helps reduce the risk of losses, it also limits the potential for large gains. The primary purpose of hedging is to manage risk, not to ensure profit from every market move.

7. What are some common mistakes to avoid when hedging?

Common hedging mistakes include overhedging, which can reduce profits, not understanding the instruments used for hedging, and poor timing of your hedge. It’s essential to regularly monitor and adjust your hedge as market conditions evolve.

Hong Kong, 1 April 2025 – VT Markets, a global multi-asset broker renowned for its fintech innovation and client-centric approach, proudly participated in the 2025 Wiki Finance Expo Hong Kong, one of Asia’s premier fintech events held at Sky100. With the theme “The Future of Fintech”, the annual expo brought together global financial institutions and technology pioneers to foster cross-border collaboration and spotlight cutting-edge advancements in trading technology.

Recognized as one of the largest and most influential industry events in Asia, this year’s expo welcomed over 230 exhibitors, 180 industry leaders, and more than 3,000 professional attendees. The event spotlighted frontier sectors such as forex, cryptocurrencies, and blockchain, featuring over ten in-depth thematic talks decoding the latest industry trends.

Transforming the Trading Experience

Trusted by over 3 million traders across 160+ countries, VT Markets continues to set the standard in user-focused innovation. At the VT Markets booth, the fusion of modern aesthetics and fintech functionality attracted steady foot traffic. Live showcases of the VTrade copy trading system impressed attendees with its one-click strategy replicate feature—enabling users to automatically follow the trades of top-performing accounts without constant screen time. Whether trading on MT5, MT4, or the VT Markets mobile app, users benefit from seamless execution, smart tools, and real-time synchronization—even during market volatility.
On-site engagement peaked as visitors downloaded the VT Markets app and experienced firsthand lightning-fast execution, rich analytical tools, and user-friendly design tailored for modern traders.

Mastering Investment Waves

During the keynote session, special guest analyst Eyad broke down the cost disparities in crypto trading tools. Compared with spot holdings, CFDs (Contracts for Difference) offer leveraged strategies that not only lower the entry threshold but also hold significant cost advantages. For example, trading a single Bitcoin using traditional tools may cost $66 in open-close fees, whereas with CFDs, it’s just $14—a 78% reduction. While others are still struggling with transaction costs, CFD traders are already using that saved $52 to seize the next market move.

In the panel discussion, Eyad dived into the core pain points of traders, bluntly addressing the root causes of trading losses and advocating for leveraging volatility to generate profits. He also emphasized the importance of forming trading alliances and using smart tools—such as VT Markets’ VTrade copy trading system—to share strategies and profits. This approach allows even everyday investors to easily access and participate in the financial markets.

Beyond the Expo: A Continued Commitment to the Region

VT Markets’ presence at the expo is just the beginning. From March to June, the company will roll out a series of interactive seminars and workshops in Hong Kong, aimed at building closer ties with local traders and equipping them with the latest insights on global markets and trading strategy.

As part of its mission, VT Markets aims to break down barriers in financial services through technological innovation, enabling every participant to share in the value of tech-powered finance and smoothly achieve their financial goals.

About VT Markets

VT Markets is a regulated multi-asset broker with a presence in over 160 countries as of today. It has earned numerous international accolades including Best Online Trading and Fastest Growing Broker. In line with its mission to make trading accessible to all, VT Markets offers comprehensive access to over 1,000 financial instruments and clients benefit from a seamless trading experience via its award-winning mobile application. 

For more information, please visit the official VT Markets website or email us at info@vtmarkets.com. Alternatively, follow VT Markets on Facebook, Instagram, or LinkedIn. 

For media enquiries and sponsorship opportunities, please email media@vtmarkets.com, or contact: 

Dandelyn Koh 

Global Brand & PR Lead 

dandelyn.koh@vtmarkets.com  

Brenda Wong 

Assistant Manager, Global PR & Communications 

brenda.wong@vtmarkets.com 

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The US dollar remains in a holding pattern as traders brace for key tariff announcements that could shape market sentiment. With economic data painting a mixed picture—showing both resilience and signs of slowing—investors are closely watching for policy shifts that may impact the dollar’s momentum. As global trade tensions evolve, all eyes are on upcoming employment reports for further clues on the economic outlook.

US Dollar Index holds steady as markets await tariff decisions

The US Dollar Index (USDX) remained stable at 103.861 on Wednesday, maintaining a sideways trend as investors awaited a crucial tariff announcement from US President Donald Trump.

The government has confirmed that reciprocal tariffs on countries imposing duties on US exports will be implemented immediately, adding further uncertainty to the financial markets.

Economic indicators signal a slowing economy

Recent economic data presented a mixed outlook. US factory activity experienced a contraction in March—the first decline this year—while inflationary pressures persisted for a second consecutive month, reflecting the ongoing impact of trade policies.

Furthermore, job openings decreased in February, although layoffs stayed relatively low, suggesting a gradual cooling in the labour market.

Technical analysis

The USDX edged up by 0.03%, closing at 103.861 after an opening of 103.829. The index reached an intraday high of 103.961 before retracting slightly.

Short-term moving averages (MA 5,10,30) indicate bullish momentum, as they remain above the longer-term moving averages, suggesting continued upward movement.

The MACD (12,26,9) further supports this trend, with a widening histogram and the MACD line (blue) positioned above the signal line (yellow), indicating strong bullish sentiment.

Key technical levels to monitor include immediate resistance at 103.911 and support at 103.484.

A breakout above resistance could trigger further gains, whereas a dip below support may indicate a potential reversal and bearish momentum.

Market outlook

With investors closely monitoring upcoming tariff developments, market attention is also directed towards the ADP employment report and nonfarm payrolls data set for release later this week.

These reports will offer crucial insights into the state of the US labour market and could influence the Federal Reserve’s policy stance moving forward.

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As March comes to a close, markets are closely monitoring economic signals, central bank guidance, and global trade tensions. Concerns over US tariff policies have sparked a risk-off sentiment, driving gains in precious metals like gold, while oil and stock markets in the US and Europe saw notable declines.

KEY INDICATORS

US economic data

• _{The core PCE price index for February exceeded market expectations in both annual and monthly terms.}
• _{This has led traders to continue betting on two interest rate cuts from the Federal Reserve this year, with the first cut expected in July.}

Fed’s Daly on future rate cuts

• _{Federal Reserve’s Daly suggested that two rate cuts in 2025 would be a reasonable expectation.}
• _{She emphasised the need to adopt a wait-and-see approach to monetary policy, allowing industries time to adjust to tariffs.}

Trump’s remarks

• _{Greenland: Trump reiterated that he would not rule out the use of military force to acquire Greenland.}
• _{Relations with Putin: He expressed anger over Putin’s recent criticisms of Ukrainian President Zelensky but still maintains good relations with Russia and plans to communicate with Putin again this week.}
• _{Russia sanctions: Trump threatened to impose secondary tariffs on Russian oil, ranging from 25% to 50%, if no agreement is reached with Russia.}
• _{Iran: Trump warned that if Iran does not reach a nuclear deal with the US, military action and secondary tariffs on Iranian products would follow.}

MARKET MOVERS

XAU/USD

• _{Price action has resulted in a new all-time high of 3127.8.}
• _{There are no clear signs suggesting that the upward trend is nearing its end.}
• _{The risk/reward ratio is unfavourable for entering a buy position at the current level.}
• _{We anticipate a temporary pullback.}
• _{The 20-hour EMA is at 3092.5.}
• _{Trading volume is increasing.}

Trade opportunity: Target 1: 3164.5 // Target 2: 3174.5 // Expires: 1 April 2025.

EUR/USD

• _{Ended a streak of six consecutive negative daily performances.}
• _{Successfully broke above the wedge formation.}
• _{The formation’s measured move target is 1.0955.}
• _{The preferred strategy is to buy on pullbacks.}
• _{The medium-term outlook remains bullish.}

Trade opportunity: Target 1: 1.0955 // Target 2: 1.1105 // Expires: 1 April 2025.

GER40 DAX

• _{There are no signs suggesting that the selloff is slowing down.}
• _{The level at 22,118 has proven to be crucial.}
• _{The short-term RSI has moved into negative territory.}
• _{The lack of market interest raises concerns for bullish sentiment.}
• _{We expect further losses to unfold today.}

Trade opportunity: Target 1: 21,601 // Target 2: 21,501 // Expires: 1 April 2025.

TODAY’S NEWS HEADLINES

Market turbulence amid recession fears

• _{Concerns over a potential US recession shifted market focus towards spending data rather than inflation metrics last Friday.}
• _{Despite positive PCE data, the US dollar index fell by 0.26%, closing at 104.01.}
• _{The 10-year US Treasury yield ended at 4.2390%, while the 2-year yield, which is more sensitive to monetary policy changes, finished at 3.9220%.}
• _{US equities declined across the board, with the Dow Jones dropping 1.69%, the S&P 500 falling 1.97%, and the Nasdaq sliding 2.7%.}
• _{Major tech stocks continued their downward trend for the third consecutive trading day: Google fell 4.8%, Meta lost 4.2%, Tesla dropped 3.5%, and Apple declined 2.6%.}

Commodities react to trade war concerns

• _{Trump’s recent tariff policies heightened fears of a global trade war, driving a shift towards risk-off sentiment.}
• _{Gold surged 0.94% to a record high of USD 3,084.33 per ounce, marking its 18th all-time high this year.}
• _{However, silver declined by 0.77%, closing at USD 34.11 per ounce, as investors took profits.}
• _{Fears of a US-led tariff war triggering a global recession put downward pressure on oil prices.}
• _{WTI crude dropped 1.25% to USD 68.97 per barrel, while Brent crude fell 1.23% to USD 72.40 per barrel.}

Global equity markets follow downward trend

• _{European stock indices mirrored US losses, with Germany’s DAX 30 down by 0.96%, the UK’s FTSE 100 falling by 0.08%, and the Euro Stoxx 50 declining by 0.92%.}
• _{The Nasdaq Golden Dragon China Index, which tracks US-listed Chinese stocks, dropped by 3.11%.}
• _{Baidu fell 5.1%, while Bilibili declined 4.6%, contributing to the broader market weakness.}

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.

As we enter the week of 31 March to 4 April 2025, global markets face rising uncertainty, with US tariff announcements, inflation data, and geopolitical risks set to drive volatility across equities, forex, and commodities. Traders are bracing for potential shifts in market sentiment as these events unfold.

KEY INDICATORS

• _{US tariff announcements: On 2 April, President Trump is set to unveil new “reciprocal tariffs,” possibly including a 25% duty on imported vehicles, fuelling market uncertainty.}
• _{Economic data: US jobs report (4 April): Expected to show slower job growth, highlighting economic fragility amid trade tensions.}
• _{Inflation: PCE price index rose 2.5% YoY in February, with a 0.3% MoM increase.}
• _{Market performance: The S&P 500 is down nearly 7% from its February peak, with tech stocks leading declines.}
• _{International developments: India plans to raise 8 trillion rupees (USD 93.34B) via bond sales to manage its 4.4% fiscal deficit.}
• _{Australia: The RBA is expected to hold rates steady, though markets anticipate a cut in May.}
• _{Investor sentiment: Rising volatility due to trade policy uncertainty, economic data, and geopolitical risks. Caution is advised.}

MARKET MOVERS

XAU/USD

• _{The price action has reached a new all-time high of 3085.9.}
• _{Trading volume is on the rise.}
• _{The overall trend continues to be bullish.}
• _{Given the current levels, the risk/reward ratio for entering a buy position is not favourable.}
• _{We expect a brief pullback before any further movement.}
• _{The 20-hour EMA stands at 3063.3.}

Trade opportunity: Target 1: 3129.5 // Target 2: 3139.5.

GER40 DAX

• _{The overall trend remains bullish.}
• _{The short-term outlook has shifted to negative.}
• _{The bearish engulfing pattern on the daily chart indicates a weakening sentiment.}
• _{Selling pressure has persisted from the 50% retracement level at 22796.}
• _{Former support at 22800 now acts as resistance.}
• _{We anticipate a period of mixed and volatile trading.}

Trade opportunity: Target 1: 22301 // Target 2: 22201.

EUR/USD

• _{The streak of six consecutive negative daily performances has been broken.}
• _{Selling pressure was observed during the Asian session.}
• _{Key support is found at 1.0711.}
• _{We anticipate further downside and prefer to enter short positions early in the session.}
• _{Economic data releases may negatively impact the short-term technical outlook.}

Trade opportunity: Target 1: 1.0711 // Target 2: 1.0632.

NEWS HEADLINES

Foreign exchange

• _{US dollar (USD): The dollar edged lower as investors remained cautious amid uncertainty over US tariffs and ahead of key US economic data.}
• _{Euro (EUR): The euro is on track for its most significant quarterly gain in over a year, bolstered by optimism surrounding peace prospects in Ukraine and rising German yields. Market participants are closely monitoring upcoming inflation figures from France and Spain, as softer readings could influence the euro’s trajectory.}
• _{Japanese yen (JPY): The yen has strengthened, reflecting its status as a safe-haven currency amid global trade uncertainties. Additionally, higher-than-expected Tokyo inflation data for March, at 2.4% versus the anticipated 2.2%, supports the case for potential monetary policy adjustments by the Bank of Japan.}
• _{British pound (GBP): Sterling remains steady, maintaining a 3.5% gain for the year. The UK’s economic data, including marginal growth in the fourth quarter and an unexpected rebound in retail sales, has provided support to the pound.}

Commodities and stocks

• _{US stock market: US stock futures are under pressure as investors grapple with the prospect of more tariffs from the Trump administration and await key inflation data. The Personal Consumption Expenditures (PCE) Price Index, a key inflation measure, rose 2.5% in February on an annual basis, aligning with expectations. On a monthly basis, the index increased by 0.3%.}
• _{Gold: Gold prices have surged to a record high, surpassing USD 3,075 per ounce. This increase is driven by investors seeking safe-haven assets amid escalating trade war concerns and economic uncertainties.}
• _{Oil: Oil prices are trading nearly flat, with volatility in the energy commodities market remaining very low.}
• _{Copper: Copper prices in London have declined for a third consecutive day, sliding further below USD 10,000 a ton, impacted by the tariff threats.}
• _{European and Asian markets: European markets are experiencing small declines, while Asian markets have faced larger drops. Japan’s Nikkei and South Korea’s benchmark index both dropped by around 2% due to concerns over auto tariffs and inflation.}
• _{Market outlook: Investors are closely watching the release of the US Personal Consumption Expenditures (PCE) inflation data, as it could provide further insights into the Federal Reserve’s monetary policy direction. Additionally, President Donald Trump’s announcement of new “reciprocal tariffs” is generating apprehension, especially with hints at a 25% duty on imported vehicles.}
• _{Overall: Global markets are navigating a complex landscape shaped by trade policy developments, economic data releases, and shifting investor sentiments.}

Asian session updates

• _{Asian financial markets experienced notable movements influenced by recent geopolitical developments and economic data releases.}
• _{Japan: The Nikkei 225 index declined nearly 2%, led by sharp drops in major automakers such as Toyota and Honda. This downturn is attributed to investor concerns over the US administration’s decision to implement a 25% tariff on auto imports, effective next week.}
• _{Hong Kong: The Hang Seng index declined by 0.6% as traders awaited further clarity on US tariff plans, particularly concerning China.}
• _{China: The Shanghai Composite Index decreased by 0.7%, reflecting investor caution amid ongoing trade tensions and awaiting further policy signals.}
• _{Gold: Gold prices reached a record high, surpassing USD 3,079.5 per ounce, as investors sought safe-haven assets amid escalating trade war concerns. The metal has gained more than 17% in the first quarter, marking its best quarterly performance since 1986.}
• _{Oil: Oil prices experienced slight declines due to concerns over the impact of new tariffs on the global economy. Brent crude futures were 0.24% lower at USD 73.85 a barrel, while US West Texas Intermediate crude futures decreased by 0.27% to USD 69.73.}
• _{US dollar: The dollar remained steady ahead of the release of the US Personal Consumption Expenditures (PCE) inflation data.}
• _{Japanese yen: The yen strengthened to 150.675 per dollar.}

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Gold is rallying as trade tensions and economic risks push investors toward safe havens. With central bank policies in focus and markets bracing for potential rate cuts, gold’s momentum remains strong. Here’s what’s driving the surge.

Gold hits record-breaking highs

Gold prices soared to unprecedented levels on Friday, nearing USD 3,070 per ounce as rising concerns over trade tensions drove investors towards this safe-haven asset.

The surge came just ahead of the expected US tariffs, with President Trump reiterating his plan to impose a 25% tariff on foreign-made cars and auto parts – a move that risks escalating trade conflicts.

This uncertainty saw traders pivot towards gold, pushing XAUUSD to peak at USD 3,077.57 during the trading session before closing at USD 3,070.32, reflecting a notable upswing.

Central bank buying, ETF demand, and Fed policy in the spotlight

In addition to trade-related fears, gold’s upward momentum was fuelled by strong inflows from central banks and increased interest in gold-backed exchange-traded funds (ETFs).

This trend signals growing confidence in gold’s value as economic uncertainty lingers amid trade tensions.

Market participants are now eagerly awaiting the US Personal Consumption Expenditures (PCE) report for further insights into the Federal Reserve’s policy direction.

Although the Fed left interest rates unchanged in its recent meeting, it maintains a dovish outlook, with two potential rate cuts expected by the end of the year.

This softer monetary stance, combined with ongoing geopolitical risks, continues to bolster gold’s bullish outlook.

Technical analysis

Gold gained 0.45% on the day, closing at USD 3,070.32 after opening at USD 3,056.58.

During the session, the price climbed to a high of USD 3,077.57 before retreating slightly, ending just below a key resistance level.

Technical indicators confirm the bullish momentum. The short-term moving averages (MAs 5, 10, 30) remain firmly above the longer-term averages, suggesting sustained upward pressure.

Meanwhile, the MACD (12, 26, 9) is expanding, with the MACD line (blue) positioned well above the signal line (yellow), further supporting the positive outlook.

Key price levels to watch include immediate resistance at USD 3,070.49 and support at USD 3,056.58.

Breaking above the resistance could pave the way for further gains, while a drop below the support level may signal a potential pullback or consolidation phase.

Outlook

As gold continues to break records, the combination of trade-related concerns, geopolitical instability, and a dovish Fed stance is likely to keep upward momentum intact.

However, traders should stay alert for upcoming PCE data and any shifts in Federal Reserve policy, as these factors could impact gold’s safe-haven appeal in the near term.

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Dear Client,

Please note that the dividends of the following products will be adjusted accordingly. Index dividends will be executed separately through a balance statement directly to your trading account, and the comment will be in the following format “Div & Product Name & Net Volume”.

Please refer to the table below for more details:

The above data is for reference only, please refer to the MT4/MT5 software for specific data.

If you’d like more information, please don’t hesitate to contact info@vtmarkets.com.