Gold edged higher on Wednesday after falling the day before. XAU/USD traded near $5,192 after dropping to $5,121. A steady US Dollar and stronger equities capped the rebound.
Trade worries returned after Donald Trump announced a 10% tariff on imports from all countries. The move follows a US Supreme Court ruling that limits the use of the International Emergency Economic Powers Act (IEEPA).
Geopolitical And Trade Uncertainty
Markets also focused on US-Iran nuclear talks scheduled for Thursday in Geneva. Trump said he prefers diplomacy. Iran’s Deputy Foreign Minister Abbas Araghchi said Tehran is ready to take steps toward an agreement.
Expectations for near-term Federal Reserve rate cuts have faded as officials highlight ongoing inflation pressure. Chicago Fed President Austan Goolsbee pointed to the 2% inflation target. Boston Fed President Susan Collins said rates may stay unchanged “for some time”.
On the 4-hour chart, gold remains below $5,250 and is forming a rising wedge. RSI (14) dropped from above 70 to the high-50s. MACD (12, 26, 9) crossed below its signal line and the histogram turned negative.
A break above $5,250 could open the way to $5,500. A move below $5,100 may bring the 100-period SMA near $5,012 into view, followed by $4,850 and $4,650.
Strategy And Risk Management
Gold is stuck in a tight range. Traders are weighing major geopolitical risks against a firm Federal Reserve. The new 10% tariff on all U.S. imports and the upcoming Iran nuclear talks in Geneva are boosting demand for safe havens like gold. At the same time, the strong U.S. dollar is a key headwind and is limiting any rally.
We have seen similar trade-policy shocks before. Gold rallied more than 20% in 2019 during the height of the U.S.-China trade conflict. With U.S. GDP growth slowing to 1.1% in Q4 2025, these new tariffs could raise recession risks, which would usually support gold. Uncertainty around the Iran talks adds another potential layer of support.
However, the Federal Reserve does not support the bullish case right now. Policymakers remain focused on inflation. The latest CPI report in January showed core inflation still high at 3.8%, so Fed officials are pushing back on expectations for rate cuts. Fed funds futures have shifted sharply, with the odds of a March cut falling from over 70% last month to below 30% today.
This fundamental tug-of-war, along with technical signs of weaker momentum, makes it risky to bet on a single direction. Instead of taking a simple long or short position, consider options strategies that can benefit from a large move either way. A long straddle—buying both a call and a put with a strike near the current $5,200 level—fits this kind of market.
This approach can profit if gold breaks strongly above $5,250 on negative geopolitical headlines, or falls below $5,100 on hawkish Fed comments. The premium paid is the maximum risk, giving a defined-risk way to trade likely volatility. This is often safer than holding a futures contract that can be whipsawed by conflicting headlines.
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