Gold fell for a second straight session. It traded near $4,930 per troy ounce during Asian hours on Tuesday, down about 0.7%. Trading volumes were light because of holidays in China, Hong Kong, and other parts of Asia.
The downside may be limited. Softer US January CPI data raised expectations for two 25-basis-point Federal Reserve rate cuts later this year. The CME FedWatch tool shows a 52% chance of a 25-basis-point cut in June and 44% in July.
Key Data Events This Week
Markets are watching the Fed meeting minutes, Q4 GDP, and the Fed’s core PCE price index later this week for policy clues. January NFP growth was the strongest in more than a year, and the unemployment rate edged lower. Meanwhile, the PCE price index is still near 3% versus the 2% target, with uneven disinflation since mid-2025.
Gold demand could rise as US–Iran tensions pick up ahead of a second round of talks. Iran held maritime drills in the Strait of Hormuz after the US deployed a second aircraft carrier. Nuclear negotiations are set to resume Tuesday.
US-led talks between Russia and Ukraine are also due to start Tuesday. Markets remain cautious about any quick progress.
Gold has pulled back to around $4,930, but selling has been limited with key Asian markets closed. The market is being pulled in two directions: a very strong US labor market and softer inflation data that points to possible rate cuts. That mix makes it hard to take a strong short-term view.
Focus On The Fed Path
The Fed’s next steps remain the main issue. Inflation has stayed stubborn since mid-2025, even though the major rate hikes ended in 2023. Recent US data shows the Personal Consumption Expenditures (PCE) index holding near 3%—about one percentage point above the Fed’s target. That makes the market’s June rate-cut bet, priced at a 52% probability, look aggressive.
Geopolitical risks are also supporting gold and helping prevent a deeper drop. Tensions in the Strait of Hormuz matter especially, because the waterway handles more than 20% of the world’s daily oil supply. Any disruption could trigger a strong move into safe-haven assets. Talks involving Russia and Ukraine are being met with skepticism, which adds uncertainty and supports demand for gold.
With signals pointing both ways, it may make more sense to use strategies that can benefit from a move up or down, rather than betting on one direction. Options strategies such as long straddles or strangles may fit this environment, since they are built to profit from rising volatility. This week’s data releases could generate the kind of price swings these trades need.
In the weeks ahead, focus on the Fed meeting minutes and the core PCE price index. These releases should offer the clearest signal on whether the Fed is moving toward the market’s rate-cut expectations or leaning on the stronger economic data. Derivatives traders should expect sharp moves around these events and position for volatility.
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