Gold (XAU/USD) fell on Thursday after rebounding from seven-week lows, trading near $4,504 and down about 0.85% on the day. Moves came as markets followed updates linked to the US-Iran war.
Reuters cited two senior Iranian sources saying Iran’s Supreme Leader ordered near-weapons-grade uranium to remain in the country. An Iranian official later denied this to Al Jazeera, while Tasnim said Tehran is reviewing a new US draft responding to Iran’s 14-point proposal.
Market Focus On Conflict And Inflation
The US Dollar Index hovered above 99.00 near over one-month highs, with demand supported by ongoing uncertainty. Oil prices stayed elevated, adding to inflation concerns and expectations for a Federal Reserve rate rise by year-end.
Fed April minutes said participants “generally judged” that elevated inflation and Middle East uncertainty could require keeping policy unchanged for longer. A “majority” said further policy firming may be needed if inflation stays persistently above 2%.
US data showed initial jobless claims at 209K versus 210K expected and 212K prior. The US Composite PMI was 51.7, Manufacturing PMI rose to 55.3 from 54.5, and Services eased to 50.9 from 51.0.
Technically, price is below the 50- and 100-day SMAs, with the 200-day SMA near $4,370; RSI is 40.51 and ADX is about 20. Resistance sits at $4,677 then $4,796, with support at $4,370.
Looking back to this time in 2025, we were dealing with gold prices around $4,504, heavily influenced by the US-Iran conflict and a strong dollar. The market was bracing for the Federal Reserve to raise interest rates, as hinted in their April 2025 meeting minutes. This created significant headwinds for gold, pinning it below its key moving averages.
The Fed did follow through on those hawkish signals, raising its key interest rate to 5.50% by late 2025, which kept the US Dollar Index strong, hovering above 105 for much of the past year. This initially pushed non-yielding gold down toward the $4,370 support level we were watching. However, persistent inflation, which has averaged 3.1% in the first quarter of 2026, has renewed safe-haven buying.
Options And Hedging In A High Volatility Tape
Now, with gold trading at new highs, derivative traders must account for elevated volatility. Central bank gold purchases, which added a record 1,037 tonnes in 2025, continue to provide a strong floor under the market. Given this underlying support, traders should consider buying call options to capture further upside while defining their maximum risk.
The geopolitical landscape remains a critical driver, just as it was a year ago. Any escalation of global conflicts could trigger sharp, unpredictable moves in the gold price. We can use options straddles, which involve buying both a call and a put option, to profit from a significant price swing in either direction over the coming weeks.
We see that implied volatility in the gold market, measured by the GVZ index, is now sitting around 19, which is higher than its historical average. This makes options more expensive, but it reflects the market’s deep uncertainty about inflation and Fed policy. This environment justifies paying a higher premium for options to protect against sudden market reversals.
For those using futures, tight stop-loss orders are essential to manage the risks from this volatility. We should also use futures contracts to hedge broader portfolio exposure to inflation and currency fluctuations. The key takeaway from the past year is that while the Fed’s actions matter, the market’s underlying fear about inflation and stability is providing a powerful tailwind for gold.
