Gold (XAU/USD) rose to a new daily high in early European trading after rebounding from the $4,633–$4,632 area, a four-day low. A Wall Street Journal report said regional countries are trying to bring the US and Iran back to talks within days after weekend discussions ended without an agreement.
US Vice President JD Vance said a final offer was made and rejected, while Iranian state media said excessive demands blocked a deal. US President Donald Trump said the US Navy would start blockading the Strait of Hormuz, and Israeli strikes in Lebanon continued, raising wider regional tension risks.
Geopolitical Tension And Oil Prices
WTI crude climbed back to $98 per barrel following the latest developments. US inflation data for March showed the largest monthly rise in nearly four years, with headline CPI up 0.9% from February and 3.3% year on year, based on US Bureau of Labor Statistics figures.
The shift in rate expectations pushed US Treasury yields higher and supported the US Dollar, which can limit gold gains. The near-term technical tone stayed mildly bearish below the 100-hour SMA, with MACD still negative and RSI near 44.
Resistance sits near the 100-hour SMA at $4,732.63, with a sustained break needed to ease the downside bias. Traders are watching prior lows and recent swing troughs as potential support zones.
We see that gold is currently trading far below the levels seen during the diplomatic crisis of 2025, when it was pushed above $4,600 per ounce. The market has since priced out the extreme risk premium from the threatened US blockade of the Strait of Hormuz. With gold now sitting around $2,354, traders should use last year’s volatility as a guide for potential price ceilings.
The geopolitical landscape remains a key driver, though the immediate threat has shifted. Last year, we saw WTI crude oil rally to $98 a barrel on fears of direct US-Iran conflict, but today it has stabilized closer to $86. While tensions in the Middle East persist, the lack of a direct superpower confrontation has removed the explosive catalyst we saw in 2025.
Inflation And Rates Outlook
We must pay close attention to the inflation data which first caused the market to pivot a year ago. The March 2025 US CPI reading of 3.3% year-over-year now looks persistent, as the latest figures for March 2026 show inflation remains sticky at 3.4%. This reinforces the market’s belief that the Federal Reserve will keep interest rates higher for longer.
This sustained high-rate environment continues to pressure non-yielding gold. Back in 2025, rising US Treasury yields were a major headwind, and that dynamic is even stronger today with the 10-year yield holding firm above 4.6%. For derivative traders, this suggests that upside for gold will be capped, making strategies like selling call spreads on rallies a viable approach.
Given the memory of last year’s sharp price swings, implied volatility in gold options should be watched closely. Any renewed escalation in geopolitical rhetoric could cause volatility to spike, presenting opportunities for those positioned to profit from it. We should therefore consider buying long-dated straddles or strangles at current levels, as they may be underpriced relative to the latent risks.
