Gold traded below $4,800 and rebounded modestly from $4,737–$4,738, a one-week low reached in Asia on Monday. It rose towards $4,815 as the US Dollar eased from a one-week high.
A jump in crude oil raised inflation concerns and lifted US Treasury yields. Higher yields limited gains in the non-yielding metal.
Tensions rose over the Strait of Hormuz ahead of the ceasefire end date of 22 April. The US Navy seized an Iranian-flagged cargo ship in the Gulf of Oman during a blockade.
Iran said the action broke the ceasefire and closed the Strait again after reopening it following a 10-day truce between Israel and Hezbollah on Friday. President Donald Trump said the blockade would continue until a peace deal is agreed.
The White House said Vice President JD Vance would lead a second delegation for more talks. Iranian state media said officials will not join while the blockade remains.
Markets priced lower odds of a Fed rate rise, with the FedWatch Tool showing about a 40% chance of a rate cut by year-end. Gold’s recent rise started near the March swing low around $4,100.
Technically, price struggled above the 100-hour SMA at $4,805.60. RSI was near 44, and MACD stayed negative, with resistance at the same average.
With gold caught between a rising dollar and long-term dovish Fed expectations, the most immediate factor for us is the April 22nd ceasefire deadline. The current standoff in the Strait of Hormuz creates significant uncertainty, which is compressing gold below the key $4,800 level. This tension ahead of a major deadline suggests a sharp price movement is becoming more likely.
Given the binary nature of the outcome, traders should consider strategies that profit from a spike in volatility rather than a specific direction. Buying options straddles or strangles with expirations in early May would allow us to capitalize on a large price swing, whether it’s a relief rally from a peace deal or a sharp drop from escalating conflict. The defined risk of these positions is well-suited for such a high-stakes geopolitical event.
This view is supported by the rise in the CBOE Gold Volatility Index (GVZ), which we’ve seen climb to 21.5 in recent days, a sharp increase from the 16.8 average we saw in March 2026. Data shows implied volatility on at-the-money gold options expiring next month has jumped by over 25% in the past week alone. This indicates the market is actively pricing in a significant move, making volatility itself a tradable asset.
If we are forced to take a directional view, the immediate pressure favors the downside as long as gold remains below the $4,805 Simple Moving Average. The strengthening US dollar, which just saw its trade-weighted index hit a six-week high of 106.50, acts as a primary headwind. A breakdown of talks could see gold retest the $4,737 low quickly, making put options or bear put spreads attractive for their defined risk.
We saw a similar dynamic play out in the lead-up to geopolitical events in 2025, where initial safe-haven demand flowed into the US dollar, temporarily suppressing gold prices. In the fall of 2025, fears around the South China Sea conflict initially pushed the dollar higher before gold eventually broke out. This historical precedent suggests that in the short-term, the dollar can win the safe-haven battle.
Conversely, any surprise de-escalation or a successful peace talk led by Vice President Vance would likely cause a sharp reversal. In this scenario, the market’s focus would snap back to the 40% chance of a Fed rate cut by year-end. A decisive break above $4,805 would be our signal to initiate bullish positions, such as buying call options, to ride the potential wave of renewed monetary policy focus.
First-quarter 2026 data showed that central bank buying slowed to just 220 tonnes, down from the record pace we witnessed in the latter half of 2025. This suggests large, price-insensitive buyers are currently on the sidelines awaiting clarity on the geopolitical front. A peaceful resolution could trigger their re-entry into the market, providing a significant tailwind for prices.
