Gold (XAU/USD) opened the week lower after rebounding on Friday from about $4,550. The move came alongside firmer US Dollar demand and expectations of higher global interest rates, which tend to weigh on non-yielding bullion.
Oil rose to a nearly four-week high after a threat to target Iran’s power plants and bridges if the Strait of Hormuz is not reopened by Tuesday. Iran said transit could resume if part of the revenue is allocated to compensate for war-related damages.
An adviser to Iran’s new Supreme Leader, Mojtaba Khamenei, warned that the Bab el-Mandeb Strait could also be targeted. This added to concerns about trade disruption and supported higher oil prices, which can feed inflation expectations.
Friday’s US Nonfarm Payrolls report pointed to a resilient labour market, supporting expectations that the Federal Reserve may keep rates higher for longer. Gold held above Friday’s low, with support near $4,600, while markets awaited US ISM Services PMI amid thin Easter Monday liquidity.
Technically, $4,600 aligns with the 38.2% Fibonacci retracement, while price remains below the 200-period EMA. MACD is below its signal and under zero, RSI is 52, resistance sits at $4,758, then $4,791 and $4,913, with supports at $4,411 and $4,300.
Central banks added 1,136 tonnes of gold worth around $70 billion in 2022, the highest annual total on record. Gold often moves inversely to the US Dollar and US Treasuries, and higher interest rates can pressure prices.
Looking back to last year, we saw gold struggling under the weight of a strong US Dollar and the threat of aggressive interest rate hikes. Geopolitical tensions in the Strait of Hormuz were spiking oil prices, leading to fears that the Federal Reserve would have to maintain its hawkish stance. This environment in 2025 favored those who were betting against the precious metal.
The picture on April 6, 2026, is markedly different, creating new opportunities for traders. Inflation has shown signs of cooling, with the latest March CPI report coming in at 3.1%, below economists’ expectations and down from the peaks we saw last year. As a result, market expectations have shifted, with CME FedWatch data now indicating a 65% probability of a rate cut by the September meeting.
This pivot in monetary policy outlook has put significant pressure on the US Dollar, which has since retreated from its 2025 highs. Gold has benefited directly, breaking convincingly above the old resistance levels of $4,750 and $4,913 that capped rallies last year. We are now seeing prices consolidate around the $4,950 mark as traders eye the psychological $5,000 level.
For derivative traders, this suggests a bullish stance is now more appropriate. With the underlying trend pointing upwards, purchasing call options or establishing bull call spreads could capture further gains while defining risk. These strategies are well-suited for a market where the fundamental drivers, like a weaker dollar and falling rate expectations, support a continued move higher.
The key levels to watch have reversed; the resistance from last year around $4,913 should now be viewed as a potential support zone on any pullbacks. Recent CFTC data showing a steady increase in net-long positions by money managers further supports this positive outlook. A strategy buying a May-expiry $5,000 call while selling a $5,100 call could offer a cost-effective way to trade the anticipated break of this key barrier.
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