Strait Of Hormuz Supply Risks
Disruption near the Strait of Hormuz has raised concerns about Oil supply, with Iran targeting tankers and commercial vessels. A BHH report estimates nearly 15 million barrels per day pass through the route, or about 10 mb/d with full alternative routing. The IEA agreed to release 400 million barrels from emergency reserves, including 172 million from the US Strategic Petroleum Reserve. Based on flow estimates, this could cover about 27 to 40 days of disruption. Markets no longer fully price in even one 25 bps rate cut in 2026, supporting the Dollar. Attention now turns to Friday’s US PCE Price Index report. Technically, gold is consolidating between $5,000 and $5,250, with RSI near 55 and ADX near 12. Resistance sits at $5,200 and $5,238, while support is near $5,115, $4,932, and $4,556.Positioning And Volatility Strategies
Central banks added 1,136 tonnes of gold worth about $70 billion in 2022, the highest on record. Gold often moves inversely to the US Dollar and US Treasuries. As of March 13, 2026, we see gold caught between powerful forces, making directional bets risky in the immediate term. The ongoing US-Iran conflict provides a strong floor for prices due to safe-haven demand. However, the resulting inflation fears are empowering a hawkish Federal Reserve, which strengthens the dollar and caps gold’s potential gains. The market’s reaction is clear in recent data, with Brent crude futures holding stubbornly above $150 a barrel despite the release of strategic reserves. This has fed directly into inflation expectations, supported by last week’s Consumer Price Index (CPI) report which showed an unexpected rise to 4.1% year-over-year. Consequently, we’ve seen Fed funds futures completely price out any rate cuts for 2026, a dramatic shift from sentiment just before the conflict began. For derivative traders, this environment of high tension within a defined range suggests looking at volatility strategies. Buying straddles or strangles with expirations in the coming weeks could be an effective way to profit from a potential sharp breakout, which could be triggered by either an escalation or a sudden de-escalation in the Middle East. This approach does not require us to guess the correct direction of the eventual move. The technical chart confirms this sideways action, with gold consolidating between the key psychological level of $5,000 and resistance at $5,250. We can use these levels to structure trades, such as iron condors, to collect premium while the market remains undecided. The CBOE Gold Volatility Index (GVZ) is currently elevated near 25, reflecting the high uncertainty and making options premiums relatively expensive. Looking back, we remember the initial price spikes in commodities at the start of geopolitical conflicts in the early 2020s, which often faded before resuming a trend. We are also mindful of the 1970s, when gold performed extremely well during a period of stagflation, as high inflation offset the impact of rising interest rates. This historical precedent suggests that if inflation continues to outpace yields, the ultimate path for gold could still be upward. Create your live VT Markets account and start trading now.
Start trading now – Click here to create your real VT Markets account
