Gold rose to a three-week high after news of a two-week ceasefire between the United States and Iran, then pared gains. XAU/USD traded near $4,755, up almost 1%, after an intraday high of $4,857.
Donald Trump said attacks on Iran would be suspended for two weeks if Tehran ensures the “complete, immediate, and safe opening of the Strait of Hormuz”. Iran’s Foreign Minister Abbas Araghchi said safe transit could be maintained with coordination from Iranian armed forces.
Ceasefire Talks And Market Reaction
The first negotiation round is due in Islamabad on Friday to discuss Iran’s 10-point peace proposal. The US Dollar Index traded near 98.80, down about 0.87%, while global equities rose.
Iran’s TasnimNewsAgency cited an unnamed source saying Tehran could leave the ceasefire if attacks on Lebanon continue. Oil also fell, with WTI down more than 10% to about $87, easing inflation pressure.
Markets awaited the Federal Reserve’s March meeting minutes later in the American session, while recent US Nonfarm Payrolls data pointed to a stable labour market. Technically, XAU/USD stayed below the 50-day SMA at $4,927.91 and above the 100-day SMA at $4,667.44, with RSI (14) near the midline and MACD positive.
We saw last year how the US-Iran ceasefire caused a rapid spike and then a partial retracement in gold prices. That event teaches us that geopolitical de-escalation news can create “sell the news” opportunities for short-term traders. Given the current tensions in the Middle East, we should be prepared for similar volatility spikes on any peace-related headlines.
Options Strategies After News Driven Rallies
This means traders should consider selling out-of-the-money call options or implementing bear call spreads on gold after a sharp, news-driven rally. Implied volatility tends to jump on such events, making option premiums expensive and profitable to sell. For instance, we saw volatility in gold options (GVZ) rise over 15% during similar periods of tension in late 2023, providing rich premiums.
Unlike the scenario in 2025 where oil prices slumped, the current environment is different. WTI crude has remained firm, trading above $86 a barrel throughout this past week due to OPEC+ supply discipline and ongoing risk factors. This sustained high price for oil is keeping inflation concerns at the forefront for the Federal Reserve.
The market has had to adjust its expectations for Fed policy this year, a key difference from the hopes of rate cuts we saw after the 2025 ceasefire. The most recent Consumer Price Index (CPI) report showed inflation holding stubbornly at 3.5% annually, which has pushed the market to price in fewer rate cuts for 2026. This “higher for longer” interest rate outlook should act as a headwind for non-yielding gold.
Technically, gold recently broke to all-time highs above $2,350 an ounce, but this rally appears overextended. We are watching for signs of exhaustion, with potential support now near the $2,280 level. A break below that could signal a deeper correction, creating opportunities for traders using put options or put spreads to hedge long positions or speculate on a downturn.
Furthermore, the US Dollar Index (DXY) is not cooperating as it did during the 2025 event, currently trading strong above the 105.50 level. This strength is a direct result of the repricing of Fed expectations versus other central banks. A strong dollar makes gold more expensive for foreign buyers and often pressures its price lower.
