Gold (XAU/USD) fell to about $4,690 in the early Asian session on Friday, dropping below $4,700. Selling pressure followed a stronger US Dollar and higher oil prices, which raised inflation concerns.
The US military said it intercepted two Iranian oil supertankers that tried to evade its blockade, according to a Bloomberg report on Thursday. Iran made threats towards vessels in the Strait of Hormuz, while Washington continued a sea blockade on Iranian trade.
Rising Tensions In The Strait Of Hormuz
Later, US President Donald Trump said that if Iran does not move the oil, its infrastructure will explode. Iranian officials said they had not agreed to extend the truce and accused the US of violating it by keeping the blockade.
Oil prices rose this week on concern about supply disruption. Higher crude prices can lift inflation and reduce the likelihood of interest rate cuts, which can weigh on non-interest-bearing gold.
Central bank buying remained a support factor for gold. In 2025 and early 2026, emerging-market central banks led by China, Poland, India, and Turkey increased gold holdings to diversify reserves away from the US Dollar, and the People’s Bank of China added 5 tonnes in March, extending purchases to 17 consecutive months.
The story was corrected on April 23 at 23:30 GMT to state the move occurred in the early Asian session, not the European session.
Technical And Options Strategy Outlook
The recent drop below $4,700 is being driven by a strong US Dollar, which we’ve seen push the Dollar Index (DXY) above 106.5. This strength comes from persistent inflation, as the latest Consumer Price Index (CPI) report for March showed an unexpectedly high 3.6% annual rate. For the next few weeks, traders might see opportunities in bearish strategies, like buying put options, to ride this downward momentum.
Elevated oil prices, now near $115 per barrel due to the tensions in the Strait of Hormuz, are feeding these inflation concerns. This makes it more likely the Federal Reserve will keep interest rates higher for longer, further boosting the dollar and weighing on non-yielding gold. The market’s reaction could lead to significant price swings, so rising implied volatility might make strategies like long straddles attractive to capture a sharp move in either direction.
However, a strong floor of support exists because of central bank demand. We saw central banks purchase a massive 1,050 tonnes in 2025, extending the record-setting buying spree we witnessed in 2022 and 2023. This ongoing accumulation, particularly from China, means that any significant dip towards the $4,600 level will likely be viewed as a major buying opportunity by these large players.
This dynamic of a strong dollar versus strong physical demand creates a tense, range-bound environment. We saw a similar situation in the early 1980s when high interest rates capped gold’s price despite global uncertainty. Traders could consider risk-defined strategies like a bull call spread, which allows for profiting from a potential rebound off the central bank support while limiting losses if the dollar continues to strengthen.
