Gold (XAU/USD) held above $4,700 during the first half of the European session on Monday, but struggled to extend a modest intraday rise. Iran reportedly submitted a new proposal to the US on reopening the Strait of Hormuz and ending the war, with nuclear talks delayed to a later stage.
This reduced oil prices and eased inflation concerns, keeping room for at least one 25-basis-point Fed rate cut in 2026. That supported non-yielding gold, though further gains were limited by caution in markets.
Geopolitical Risks Remain Elevated
Traffic through the Strait of Hormuz remained largely blocked due to Iran’s movement limits and a US naval blockade of Iranian ports. Israel’s Prime Minister said he ordered attacks on Hezbollah targets in Lebanon, keeping geopolitical risk in view.
Markets also stayed cautious ahead of the two-day FOMC meeting starting Tuesday, with attention on inflation and US economic activity. Updates on the US-Iran situation were also expected to affect price swings.
In physical markets, India’s gold premiums rose to the highest in over two-and-a-half months on tight supply. China premiums were $9 to $12 an ounce, up from $3 to $6 the prior week.
Gold has ranged since early month after rebounding from the 200-day SMA tested in March; RSI was near 47 and MACD showed modest positives. Support sits near $4,650-$4,645, while resistance is seen at $4,750, $4,800, and $4,860-$4,865, with $5,000 above that.
Trading Approaches For A Rangebound Market
Given the conflicting signals, we see an opportunity in volatility rather than a clear directional bet. The potential for a US-Iran peace deal is creating downward pressure on the dollar, but the ongoing Strait of Hormuz blockade and Israeli military actions keep geopolitical risk premium alive. We saw a similar pattern in late 2025, where initial peace rumors caused a sharp but temporary drop in safe-haven assets before reality set in.
The upcoming FOMC meeting is the most critical event, as the market is nervous about the Fed’s next move. The latest US CPI report showed core inflation holding stubbornly at 3.1%, making a dovish pivot from the Fed less certain. CME FedWatch tool data indicates the probability of a rate cut by September 2026 has recently slipped from 70% to just under 60%, reflecting this uncertainty.
With gold consolidating between roughly $4,645 and $4,865, selling premium appears to be a viable strategy for the coming weeks. An iron condor, selling call options above $4,870 and put options below $4,640, could capitalize on price containment and time decay. The Cboe Gold ETF Volatility Index (GVZ) has ticked up to 18.5 ahead of the meeting, making such options sales more attractive.
For those anticipating a bullish breakout fueled by a dovish Fed or strong physical demand, a call spread would be a prudent approach. Buying a $4,800 call and selling a $5,000 call for a future expiration date limits the upfront cost while capturing a significant portion of the potential move. This is supported by the World Gold Council’s Q1 2026 report, which noted a 12% rise in central bank buying.
However, we must also prepare for a breakdown below the key $4,645 support level. A surprisingly hawkish statement from the Fed could strengthen the dollar and send gold tumbling. Purchasing put options with a strike price around $4,600 would offer protection against such a move and could prove profitable if technical selling accelerates.
