Gold (XAU/USD) fell below $4,550 in Monday’s European session, extending losses and moving towards last Thursday’s lows just above $4,500. Risk-off trading and rising tensions between the US and Iran supported the US Dollar and weighed on gold.
US President Donald Trump said the US plans to free vessels blocked in the Strait of Hormuz, without giving operational details. Iranian authorities said the waterway will remain closed and warned that any US military incursion would breach the ceasefire, with a response in “full strength”.
Technical Picture And Key Levels
On the 4-hour chart, the trend stays bearish from the mid-April highs, with RSI near 36 and MACD moving into negative territory. Support is seen between the April 29 low at $4,510 and late March lows just below $4,500, then at the March 26 low near $4,350 and the March 23 low near $4,100.
Resistance stands at Friday’s high of $4,660, with mid-April highs below $4,900 above that. Central banks added 1,136 tonnes of gold worth around $70 billion in 2022, the highest yearly purchase since records began.
Looking back to this time in 2025, the market was bracing for a significant drop in gold, with many bears targeting the $4,500 support level. This bearishness was fueled by a strong US Dollar and specific geopolitical tensions in the Strait of Hormuz. The technical setup at the time strongly suggested more downside was imminent.
However, that deep slide below $4,500 never fully materialized, and we’ve spent much of early 2026 consolidating above that key level. The current environment is now shaped by a Federal Reserve that has begun a cautious easing cycle, a stark contrast to the monetary policy of a year ago. The CME FedWatch Tool now indicates a greater than 70% probability of another rate cut by the fourth quarter, which is fundamentally changing the landscape for non-yielding assets.
Central banks remain a major force, continuing the aggressive buying spree we saw throughout 2025. The World Gold Council reported that global central banks added a robust 290 tonnes in the first quarter of 2026, signaling strong institutional demand below the $4,800 mark. Consequently, the US Dollar Index (DXY) has softened from its 2025 highs, now hovering around 102, which removes a key headwind for gold.
Positioning And Hedging Considerations
For derivative traders, this suggests a shift away from outright bearish bets like buying puts. Instead, strategies that benefit from range-bound price action or a slow grind higher seem more appropriate now. We’re seeing increased interest in selling out-of-the-money puts to collect premium around the established $4,500 support level.
It is important to remember that underlying geopolitical risks, now more focused on Eastern Europe and East Asia, could still trigger sharp moves. This makes buying long-dated call options an attractive hedge for those anticipating a sudden flight to safety. Volatility is relatively subdued compared to last year, making option premiums more affordable for positioning for a potential breakout.
