Gold traded flat near $4,775 on Friday and was set for a third weekly rise. Markets tracked Middle East developments and the latest US inflation report.
US CPI rose 0.9% month on month in March, up from 0.3% previously. Annual CPI increased to 3.3% year on year from 2.4% in February, with higher energy costs noted.
Dollar Pressure And Geopolitics
The US Dollar remained under pressure as risk sentiment improved after a two-week ceasefire agreement between the US and Iran. Ongoing conflict in Lebanon and planned US-Iran talks in Pakistan also kept demand for gold supported.
On the 4-hour chart, gold has made higher highs and higher lows since the March swing low near $4,100, within a rising channel. Price sat below the 200-period SMA at $4,876 and above the 100-period SMA at $4,608, with RSI near 57 and MACD below its signal line.
Resistance was seen near $4,878, with a potential move towards about $5,000. Support sat near $4,700 and then $4,608.
CPI tracks price changes in a basket of goods and services, shown as MoM and YoY rates. Core CPI excludes food and fuel, and central banks often target inflation near 2%; higher rates can weigh on gold by raising the cost of holding it.
Balancing Inflation And Risk
Given the current situation, we see gold caught between conflicting forces, making a strong directional bet risky in the immediate term. The ongoing geopolitical uncertainty in the Middle East provides a solid floor for prices, while high US inflation data traditionally puts a cap on gains. This suggests gold will likely remain within a defined range for now.
The March inflation number of 3.3% is a major factor, driven by higher energy costs that remind us of the inflationary spike we witnessed through 2022. Recent data from the Bureau of Labor Statistics for Q1 2026 shows core PCE, the Fed’s preferred gauge, hovering at 2.8%, which is well above their 2% target. This confirms the disinflation process has slowed, keeping the Federal Reserve in a wait-and-see mode.
All eyes should be on the upcoming US-Iran negotiations, as they represent the most probable catalyst for a breakout. We saw back in 2022 how Brent crude futures shot past $120 a barrel after the conflict in Ukraine began, so we know how quickly energy can disrupt Fed plans. A breakthrough in talks could send gold sharply lower toward the $4,600 support, while a collapse would likely propel it toward the $5,000 resistance.
This uncertainty makes options strategies particularly useful over the next few weeks. We should consider buying a strangle, which involves purchasing both an out-of-the-money call option with a strike near $5,000 and a put option with a strike near $4,650. This position will profit from a significant price move in either direction, capitalizing on the high chance of a headline-driven breakout.
For those expecting the current stalemate to continue, selling volatility might be a better approach. An iron condor, centered around the current price of $4,775, would allow us to collect premium as long as gold stays between the key support and resistance levels. This is a bet that the geopolitical risk and inflation pressures will continue to cancel each other out in the short term.
Market data appears to support positioning for a large move, not continued quiet. CME Group options data shows a significant build-up in open interest for both out-of-the-money calls around the $5,000 strike and puts below $4,650 for May expirations. The market’s implied volatility for gold also remains elevated, suggesting traders are pricing in a larger-than-usual price swing in the next 30 days.
