Gold is currently trading in a narrow range after recently reaching a high of about $4,643. This was driven by geopolitical worries and concerns about the Federal Reserve’s independence. At the moment, gold’s price stands around $4,610, indicating a slight weekly gain. With reduced tensions in Iran, the demand for gold as a safe haven has lessened. Meanwhile, strong US economic data and comments from a hawkish Federal Reserve suggest that interest rate cuts might be postponed. However, ongoing geopolitical risks still impact the market, with expectations of two rate cuts this year still in the air.

Impact of Geopolitical Updates on Gold Price

Gold’s price is sensitive to geopolitical events and updates from the Federal Reserve, especially as the bank approaches its meeting blackout period. The President’s softer approach to Iran has shifted some geopolitical risk factors, though new US sanctions have been imposed on Iranian officials. US economic data this week supported a gradual easing approach for the Fed. Interest rates are expected to stay the same in January. Traders anticipate the first rate cut in June 2023, as jobless claims fell to 198,000, less than the expected 215,000. Technically, gold is in a range between $4,580 and $4,640. The 4-hour Relative Strength Index (RSI) has moved out of the overbought zone, with the 21-period Simple Moving Average acting as a pivot point. Looking back at early 2025, gold was also rangebound, influenced by easing tensions with Iran and the Federal Reserve’s hawkish stance. As of January 16, 2026, gold has climbed higher, but the key issues of geopolitics and monetary policy remain crucial. Although the specific geopolitical concerns have changed, they still impact the price.

Interest Rate Cuts and Inflation

The anticipated two rate cuts in 2025 did not fully happen; the Fed only implemented a single quarter-point cut late in the year. Persistent inflation, with December 2025 CPI at 2.9%, has kept policymakers cautious. This uncertainty makes options strategies that benefit from volatility, such as straddles or strangles, appealing. While strong economic data in early 2025 supported a hawkish Fed, we are now seeing signs of gradual cooling. Recent jobless claims are closer to 220,000, up from around 200,000 a year ago. This softer economic landscape raises gold’s attractiveness as a safe haven, warning traders against large short positions. Demand from central banks, identified as a key factor last year, has only grown stronger. According to World Gold Council data for the third quarter of 2025, central banks added 337 tonnes to their reserves, marking one of the strongest quarters ever. This ongoing institutional buying suggests that any substantial price drops will likely see robust demand, making selling puts a worthwhile strategy. The previous trading range around $4,600 has been surpassed, leading to a new consolidation pattern between $4,680 and $4,750. With the daily Relative Strength Index not yet overbought, traders might consider buying call spreads to aim for a retest of the highs with defined risk. Given the solid underlying support, selling out-of-the-money puts could also be a good strategy to collect premiums while waiting for a pullback. Create your live VT Markets account and start trading now.

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