Gold rose on Friday after earlier falls, trading near $4,655 after a one-month low of $4,510 this week. Moves followed new headlines on the Middle East war.
Iran reportedly sent a new proposal via Pakistani mediators after US amendments. IRNA said Foreign Minister Abbas Araghchi has briefed regional counterparts on Iran’s position to end the war.
Central Banks Hold Rates
Energy costs have risen since the US-Iran war began, adding to inflation and affecting rate expectations. The Fed, ECB, BoE, BoJ and BoC all kept rates unchanged, while stressing data-dependent decisions.
Markets now expect the Fed to delay rate cuts. CME FedWatch shows traders pricing a hold through this year, and the chance of a rate hike by April 2027 at 24.2%, up from 1.9% a week ago.
Gold has faced pressure amid higher-for-longer rate expectations and has logged two straight monthly declines since the war began. Oil supply disruption through the Strait of Hormuz is keeping prices elevated and inflation in focus.
World Gold Council data for Q1 2026 show total demand up 2% year on year to 1,231 tonnes, with central bank buying near 244 tonnes, up 3%. Gold-backed ETFs added 62 tonnes, while bar and coin demand rose 42% to 474 tonnes.
Technically, price is below the 100-day SMA at $4,762, with RSI near 41. Levels cited include $4,603, $4,759–$4,761, $4,914, $5,108, and supports at $4,381, $4,281, and $4,099.
Outlook And Strategy
Given the current environment on May 1, 2026, we see gold reacting to Middle East headlines but being held back by a much stronger force. The recent reports of diplomatic talks are causing brief price spikes, but persistent inflation is the dominant factor for traders to watch. The latest Consumer Price Index (CPI) data for April 2026 showed inflation holding at a stubborn 4.5% year-over-year, keeping central banks on high alert.
The Federal Reserve’s hawkish stance is directly linked to high energy costs, with Brent crude oil remaining elevated near $115 a barrel due to the ongoing conflict. We expect interest rates to remain high for the foreseeable future, as policymakers have made it clear they will prioritize fighting inflation. This environment significantly raises the opportunity cost of holding non-yielding gold, limiting its appeal.
For the coming weeks, we should consider any rally toward the $4,760 resistance level as a selling opportunity. A strategy of selling call spreads with strike prices above this technical barrier could be effective, capitalizing on the expected price ceiling and premium decay. This position profits if gold remains below the strike price by expiration, reflecting the bearish near-term macro pressure.
Volatility will likely remain high due to the unpredictable geopolitical headlines, making options premiums relatively expensive. This suggests that buying puts for downside protection could be costly, though it remains a valid strategy for those anticipating a sharper drop toward the $4,381 support level. Alternatively, the elevated volatility makes selling premium an attractive income-generating strategy for range-bound expectations.
When we look back at the market of 2022-2023 from our perspective in 2026, we see a similar pattern where gold initially struggled when the Fed began its aggressive rate-hiking cycle. Despite high inflation then, the rising dollar and bond yields weighed heavily on the metal before it eventually found its footing. We are likely in a similar phase now, where monetary policy is trumping gold’s traditional safe-haven role.
Longer-term, however, the fundamental demand from central banks and investors remains strong, suggesting a floor for prices. A patient strategy would be to wait for a potential dip toward the 200-day moving average around $4,281. Selling cash-secured puts at strikes below $4,300 could be a way to either collect premium or acquire a long-term position at a more favorable price.
