Gold rose by over 1% in North American trading on Wednesday, after earlier losses of about 4.40% linked to broad US Dollar strength. It traded near $5,150 as tensions in the Middle East continued. The New York Times reported Iranian intelligence contacted the CIA indirectly a day after the attacks to discuss terms to end the war. US officials were sceptical about near-term de-escalation, and reports of a US submarine sinking an Iranian warship affected risk appetite.

Dollar Yields And Energy Disruptions

The US Dollar Index fell 0.25% to 98.82, while the 10-year US Treasury yield was unchanged at 4.069%. Some Middle East countries halted oil and gas production, with the conflict in its fifth straight day. The ISM Services PMI rose from 53.8 in January to 56.1, a three-and-a-half year high. ADP private payrolls were 63K versus a 50K estimate, after January’s 11K downward revised figure. Thursday brings Challenger Job Cuts and Initial Jobless Claims, plus remarks from Fed Governor Michelle Bowman. Money markets priced 43 basis points of Fed easing by year-end. Gold levels include resistance at $5,200, then $5,249, $5,300, $5,379, and $5,419. Support sits below $5,000 at $4,950, $4,841, and the 50-day SMA near $4,810, with RSI described as rising but weak.

Framing The Current Setup

Looking back at the analysis from early 2025 reminds us how geopolitical shocks drove gold toward $5,150. That rally faded as the specific US-Iran conflict de-escalated and a strong dollar took hold for the rest of that year. Today, with gold hovering near $4,900, the situation presents a familiar, yet different, set of variables for us to consider. We are seeing renewed tensions in the Middle East, this time centered on maritime shipping disruptions, which is putting a floor under gold prices. We remember how quickly prices ran up to the March 2025 peak of $5,379 during the peak of last year’s crisis. This history suggests that any further escalation could trigger a rapid move upward, catching many traders off guard. However, the US economy remains a powerful headwind for precious metals. The most recent Consumer Price Index report for February 2026 showed inflation remains sticky at 3.1%, and forecasts for this Friday’s Nonfarm Payrolls report are for another strong gain of 190,000 jobs. This persistent economic strength is very different from the slowdown some were expecting back in early 2025. This economic resilience has forced a major repricing of Federal Reserve expectations. Whereas the market priced in 43 basis points of cuts in early 2025, current money markets are pricing in just one 25 basis point cut by the end of 2026. Fed Chairman Powell’s hawkish tone last week reinforces this “higher for longer” stance, which continues to support the US Dollar. This creates a classic conflict between geopolitical fear and economic reality, a perfect environment for options strategies. We should consider buying out-of-the-money call options to position for a potential spike in prices. This provides us with upside exposure to a geopolitical event while strictly defining our risk to the premium paid. Specifically, we are looking at purchasing April and May 2026 call options with strike prices around the $5,000 to $5,050 level. The goal is to establish these positions before implied volatility rises further on the back of Mideast headlines. This allows us to profit from a sharp move higher while risking a relatively small amount of capital if the strong US economy continues to dominate the narrative. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account