Gold rose by more than $50 from an Asian low near $4,672 as some traders bought dips. Reports said Iran sent the US a proposal on reopening the Strait of Hormuz and ending the war, with nuclear talks delayed.
This reduced support for the US dollar and helped gold. Lower oil prices also eased inflation fears and kept expectations open for at least one 25-basis-point US rate cut in 2026.
Geopolitical Risks And Shipping Disruptions
Shipping through the Strait of Hormuz remained mostly blocked due to Iran’s movement limits and a US naval blockade of Iranian ports. Israel’s Prime Minister Benjamin Netanyahu said he ordered strong attacks on Hezbollah targets in Lebanon, keeping risks elevated.
Markets also awaited a two-day FOMC meeting starting Tuesday for guidance on rates amid sticky inflation and firm US activity. News on US-Iran relations was expected to add volatility to gold.
In Asia, gold premiums rose on tight supply and demand. India premiums hit a more than two-and-a-half month high, while China premiums were $9 to $12 an ounce versus $3 to $6 the week before.
Technically, gold stayed range-bound, with RSI near 47 and MACD mildly positive. Support was noted near $4,700 and $4,650-$4,645, while resistance sat at $4,750, $4,800, and $4,860-$4,865, with $5,000 as the next round level.
Trading Strategy And Risk Management
Given the conflicting signals, we should prepare for significant volatility in the coming weeks. The positive news about potential US-Iran talks is causing a short-term rally in gold, but the upcoming FOMC meeting is a major risk event. With US core inflation remaining stubbornly above 3%, a problem we also faced back in 2024 and 2025, the Federal Reserve may deliver a hawkish message that could quickly strengthen the dollar and push gold back down.
The geopolitical situation remains tense and should not be underestimated. The Strait of Hormuz is a critical chokepoint, historically responsible for the passage of about 20% of the world’s daily oil supply, and its continued blockage supports oil prices and the dollar’s safe-haven appeal. This reality puts a cap on how high gold can go based on peace talks speculation alone.
For derivative traders, this environment suggests using options to define risk. Buying call options or bull call spreads on dips towards the $4,650 support area offers a way to position for a potential breakout with a limited downside. This approach aligns with the strong physical demand from Asia, which suggests that sharp drops will likely be met with buying interest.
However, we must temper our bullishness with the reality of a resilient US economy. Recent jobs reports, which have consistently added over 200,000 jobs per month, give the Fed little reason to rush into cutting rates. Therefore, any strength in the dollar following the FOMC meeting could present an opportunity to buy put options as a hedge or a speculative play on gold falling back into its recent range.
Ultimately, we are trading within a well-defined range between roughly $4,650 and $4,865. We should treat these levels as key pivot points for our strategies in the near term. A decisive breakout above the range high would be our signal to become more aggressive with bullish positions, targeting the psychological $5,000 level.
