Gold fell to a near one-month low at about $4,571, down roughly 2.35% on the day. The move came as the US Dollar strengthened and oil-related inflation worries persisted.
It has been two months since the US and Israel launched attacks on Iran, and a ceasefire is described as holding. A second round of talks has not advanced, and Iran is expected to submit a revised proposal in the coming days, according to CNN.
Dollar Strength Pressures Gold
The US Dollar stayed supported amid uncertainty, with the US Dollar Index (DXY) around 98.67, up 0.20% on the day. A stronger dollar can reduce demand for gold by making it costlier in other currencies.
Oil prices remained elevated as supply through the Strait of Hormuz was described as largely disrupted due to a dual blockade. Markets are focused on the Federal Reserve decision on Wednesday, with a hold fully priced in, according to the CME FedWatch tool.
ADP Employment Change 4-week average eased to 39.25K from 40.25K. The Conference Board’s Consumer Confidence Index rose to 92.8 in April versus a forecast of 89, from 91.8 previously (revised to 92.2).
Technically, gold stayed below the 100-day SMA ($4,749) and 50-day SMA ($4,854), with RSI near 39 and MACD negative. Support sits near $4,550, then the 200-day SMA around $4,263.
Looking Back To 2025
Looking back to this time in 2025, we saw gold pressured by a strong dollar as US-Iran talks remained stalled. The conflict kept risk sentiment fragile and supported the greenback. This environment was challenging for gold bulls, pinning the metal below key moving averages.
That dynamic shifted later in 2025 as a fragile diplomatic resolution was reached, which temporarily eased oil supply fears through the Strait of Hormuz. This caused the US Dollar to soften from its highs and allowed gold to stage a significant recovery through the end of last year. Many traders believed the Federal Reserve’s “higher-for-longer” stance had peaked.
However, the situation has now changed, and traders should adjust their positions accordingly. The latest Core CPI reading for March 2026 came in hotter than expected at 3.1%, reversing a downtrend and reigniting inflation fears. This surprise data suggests that buying put options on gold futures (XAU) could be a prudent strategy to hedge against or profit from a potential new downswing.
These inflation concerns are amplified by the recent OPEC+ decision to extend production cuts, pushing WTI crude prices back above $95 a barrel. Adding to this, the last Non-Farm Payrolls report showed a robust gain of 250,000 jobs, giving the Fed little reason to consider easing policy. Markets are now pricing in only a 40% chance of a rate cut this year, a sharp reversal from the 85% probability we saw just two months ago.
Given the conflicting signals of resilient economic data and renewed inflation, implied volatility on gold options is rising. This environment is ideal for strategies that profit from sharp price movements, regardless of direction. Traders might consider setting up long straddles, buying both a call and a put option with the same strike price and expiry, to capitalize on a significant breakout ahead of the next Fed meeting.
The technical picture for gold has soured once again, echoing the setup we saw in 2025. After failing to hold above the psychological $5,000 level earlier this month, the price has now broken below its 50-day moving average, currently near $4,820. A sustained break below the immediate support at $4,750 could open the door for a retest of the 100-day moving average around $4,600, presenting a clear target for bearish plays.
