Gold (XAU/USD) steadied on Monday after opening with a bearish gap. It traded near $4,800, after an intraday low around $4,737 in the Asian session.
Tensions around the Strait of Hormuz stayed high after Iran effectively closed it again following a temporary reopening. Iran cited a US naval blockade of its ports as a breach of current ceasefire terms.
The US Navy intercepted and boarded an Iranian cargo vessel in the Gulf of Oman, and Iran threatened retaliation. A two-week ceasefire is due to expire on Wednesday.
US President Donald Trump said it is “highly unlikely” he will extend the ceasefire and said, “We will not open the Strait of Hormuz until a deal is signed.” He also wrote the US would “knock out every single power plant and every single bridge in Iran” if no deal is reached.
Reuters reported a senior Iranian official said Pakistan is making “positive efforts” to help end the blockade and support Iran joining talks. Oil price strength has kept inflation risks in view and could support tighter policy for longer.
US releases include Retail Sales and preliminary S&P Global PMI surveys, plus Kevin Warsh’s Fed Chair confirmation hearing on Tuesday. On the 4-hour chart, the 200-period SMA is $4,794 and the 100-period SMA is $4,706; RSI is 50.24 and ADX is 14.47, with resistance near $4,890 and $5,000. Central banks added 1,136 tonnes of gold worth around $70 billion in 2022.
The immediate focus for us is the Wednesday ceasefire deadline, which is creating a powder keg of uncertainty and an ideal environment for trading volatility. With gold consolidating around the critical $4,800 mark, we see opportunities in using options to bet on a large price swing. Strategies like straddles, which profit from a significant move in either direction, appear well-suited for the binary outcome of either renewed conflict or a surprise peace deal.
If diplomacy fails and tensions escalate, the renewed closure of the Strait of Hormuz will be the primary catalyst for a flight to safety. About 20% of the world’s daily oil consumption passes through this strait, and with Brent crude prices already pushing past $115 per barrel, an extended closure would amplify inflation fears and drive safe-haven demand for gold. We are looking at call options to capture a potential sharp move towards the psychological $5,000 level.
Conversely, a surprise diplomatic breakthrough or an extension of the ceasefire would likely cause gold’s geopolitical risk premium to vanish, sending prices lower. This downside is amplified by this week’s confirmation hearing for Kevin Warsh as Fed Chair, whose historically hawkish leanings could reinforce a “higher-for-longer” rate policy that weighs on non-yielding gold. For this scenario, we see put options as an effective way to position for a potential drop back toward the $4,700 support zone.
We have seen this playbook before, looking back at 2022 when the start of the conflict in Ukraine caused the VIX, a measure of market volatility, to surge over 85% in a matter of weeks. That short-term volatility sits on top of a strong underlying bid from official institutions. Updated data for 2025 confirmed central banks continued their gold acquisition spree, adding another 984 tonnes to their reserves as they sought to diversify away from geopolitical risk.
From a trading perspective, the price action around the 200-period moving average near $4,794 is the line in the sand. A decisive break below this level could accelerate selling, while holding it firms up the base for another attempt at breaking last week’s high near $4,890. We are using these technical levels as triggers to enter and manage our positions around the week’s key geopolitical news.
