Geopolitical And Rate Backdrop
Ali Akbar Velayati, an advisor to Iran’s new Supreme Leader, Mojtaba Khamenei, warned the Bab el-Mandeb Strait could be targeted. The US Nonfarm Payrolls report on Friday was strong, adding to expectations that the Federal Reserve may keep rates higher for longer. Traders are watching whether price falls below $4,600, after a rebound from about $4,100, a four-month low in March. The US ISM Services PMI is due later, with thin liquidity due to the Easter Monday holiday in many markets. Technically, $4,600 is the 38.2% Fibonacci level, with price below the 200-period 4-hour EMA. MACD is below its signal but both are just above zero; RSI is 52, with resistance at $4,758, then $4,791 and $4,913, while support sits near $4,411 and $4,300. We are seeing gold get a temporary lift from ceasefire talks, which is weakening the US dollar for the moment. However, the bigger story is still the threat of higher global interest rates, which caps how high a non-yielding asset like gold can realistically go. This situation presents an opportunity to fade this rally rather than chase it.Inflation And Oil Shock Risk
The main headwind for gold is the persistent inflation driven by high energy prices. We remember how inflation remained stubbornly above 3% for much of 2025, forcing the Federal Reserve to keep interest rates elevated. Last Friday’s strong US jobs report only reinforces the idea that the Fed has no reason to cut rates soon, which should ultimately support the dollar and weigh on gold. The geopolitical risk in oil markets is what’s fueling these inflation fears, making the Fed’s job harder. With the Strait of Hormuz accounting for about 20% of the world’s daily oil consumption, threats to this chokepoint keep crude prices high and directly pressure global inflation. Historically, we’ve seen oil shocks like this, such as the disruptions in the Red Sea during 2024, lead to prolonged periods of central bank hawkishness. Given this conflict between a short-term geopolitical bounce and a bearish macroeconomic backdrop, we should consider selling this strength. Establishing bearish positions using options, like selling call spreads with strike prices above the $4,758 and $4,791 resistance levels, could be a prudent strategy. This allows us to profit if gold fails to break higher in the coming weeks. The key level to watch is $4,600. A decisive break and hold below this price would signal that the recent bounce has failed and the broader downtrend is resuming. If that happens, we would look to add to bearish positions or buy puts, targeting the next support level around $4,411. For now, any news on the ceasefire talks will create short-term volatility, but the upcoming US ISM Services data will be more important for the medium-term trend. A strong reading would confirm the economy’s resilience and likely strengthen the US dollar, putting immediate pressure back on gold prices. We need to stay focused on the inflation and interest rate narrative, as it will overpower these temporary news-driven moves. Create your live VT Markets account and start trading now.
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