Gold rose more than 1.50% on Friday, breaking above $4,850, as Iran reopened the Strait of Hormuz during a 10-day truce agreed between Israel and Lebanon. US crude oil (WTI) fell more than 9.50% to $81.74 per barrel, and the US Dollar Index dropped 0.17% to 98.01, a seven-week low.<\/p>\n
Iran\u2019s Foreign Minister Abbas Araghchi said the Strait was open to all commercial vessels, according to Reuters, and Donald Trump posted that the strait was fully open. A senior Iranian official told Reuters that differences remain between Tehran and Washington and said the Strait staying open depends on the terms of an Iran-US ceasefire.<\/p>\n
The fall in oil led markets to price in 14 basis points of Federal Reserve easing by year-end, according to LSEG Workspace data. Fed Governor Christopher Waller said he prefers holding rates if war lifts inflation and weakens the labour market, while San Francisco Fed President Mary Daly put the near-neutral rate at 3%.<\/p>\n
US 10-year yields fell 7 basis points to 4.246%, the lowest since mid-March. Gold bounced from $4,767 but did not clear the 50-day SMA at $4,899, with resistance at $4,900, then $4,950 and $5,000, while support sits at $4,750, $4,699 and $4,549.<\/p>\n
Given the de-escalation news from yesterday, we see that implied volatility has likely been crushed across asset classes. This temporary calm presents an opportunity, as the underlying conflict between the US and Iran is far from resolved, with officials warning the truce is conditional. The sharp market reactions to headlines suggest that we should prepare for continued uncertainty in the coming weeks.<\/p>\n
The more than 9% single-day collapse in WTI is a significant event, reminiscent of the demand shocks we saw back in the early 2020s. While this eases inflation fears for now, the situation in the Strait of Hormuz remains fragile. We believe buying cheap, out-of-the-money call options on crude oil futures for the coming months offers a low-cost way to hedge against the truce failing and prices snapping back violently.<\/p>\n
Gold is in a tricky position, rallying on hopes for Federal Reserve rate cuts rather than as a pure safe-haven asset. It is currently stuck below the key $4,900 resistance level, creating a tense technical picture. We think a long strangle strategy, which involves buying both an out-of-the-money call and put option, is prudent to profit from a large price swing in either direction if the geopolitical situation changes suddenly.<\/p>\n
The market is now aggressively pricing in Fed easing, with 14 basis points of cuts anticipated by year-end based on a single day’s news. We saw throughout 2024 and 2025 how quickly these expectations can shift based on new inflation data or global events. This makes shorting the US Dollar tempting, but a flare-up in tensions would quickly reverse this trade as investors rush back to its safety.<\/p>\n
With the market celebrating a potential peace, the CBOE Volatility Index (VIX) has likely fallen to attractive levels. We recall how the VIX surged above 35 during the onset of the geopolitical conflict in early 2022. Buying VIX call options now could be a direct and cost-effective way to position for the return of market fear should the diplomatic situation deteriorate.<\/p>\n","protected":false},"excerpt":{"rendered":"
Gold jumped above $4,850 as Hormuz reopened, oil plunged, dollar weakened, and Fed easing expectations grew.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-45292","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45292","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=45292"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45292\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=45292"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=45292"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=45292"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}