Gold started the week lower as risk appetite weakened after the US-Iran conflict escalated over the weekend. XAU/USD traded at $4,803, down 0.70%, with steady US Treasury yields and rising oil prices limiting support for gold.
Iran shut down the Strait of Hormuz and demanded an end to the US blockade, which has impeded Iran-flagged vessels. The US seized an Iranian ship after it had been warned by the US Navy to return to its departing port.
Us Iran Talks And Market Reaction
JD Vance is set to lead the US negotiating team with Steve Wytkoff and Jared Kushner. Reports about an Iranian delegation travelling to Islamabad were denied by a source cited by Fars.
Donald Trump said he is unlikely to extend the ceasefire, which he said expires on Wednesday evening, Washington time. He added the blockade would stay in place until Iran signed a deal.
The US 10-year yield rose nearly two basis points to 4.266%, and gold hit five-day lows near $4,735. Kevin Warsh is due to tell lawmakers on Tuesday that he is committed to an independent monetary policy.
Fed officials entered a blackout period ahead of the April 28-29 meeting, with markets expecting rates to stay unchanged and 14 basis points of easing priced in for later this year. Retail Sales is due Tuesday, along with ADP Employment Change 4-week average data.
Technical Levels And Options Positioning
Gold traded around $4,800, with RSI flat in bullish territory and a mild negative divergence after a $4,890 high last Friday. A close below $4,800 could open $4,706 (100-day SMA) and $4,665 (20-day SMA), while resistance sits at $4,850 and $4,890 (50-day SMA).
We remember this time last year, around April 2025, when gold was trading near $4,800 amid escalating US-Iran tensions in the Strait of Hormuz. That period was defined by a delicate balance between geopolitical risk pushing prices up and rising Treasury yields providing a headwind. The market was also pricing in potential rate cuts from the Federal Reserve by the end of that year.
Today, the geopolitical landscape remains a key driver, although direct conflict has simmered down to a cold war of sanctions and proxy engagements. Gold is currently trading much higher, consolidating around $5,150, as central bank buying has accelerated through the first quarter of 2026. Recent data from the World Gold Council confirms central banks added a net 85 tonnes in March 2026, continuing the robust trend we saw throughout 2025.
Given this backdrop of sustained tension and official sector demand, implied volatility in gold options has been creeping up, with the GVZ index hitting 21.4 last Friday. This suggests that traders could consider strategies like long straddles to capitalize on a potential sharp move, regardless of direction, ahead of key inflation data next week. The elevated volatility makes selling premium through strategies like iron condors risky unless you expect a period of tight consolidation.
Unlike last year when we were anticipating 14 basis points of easing, the Fed under Chair Warsh has maintained a hawkish stance. The futures market is now pricing in only a 30% chance of a single rate cut by December 2026, a stark contrast to the dovish sentiment of early 2025. This makes gold’s resilience above $5,000 particularly noteworthy, as it is fighting against higher-for-longer interest rates.
The technical divergence we noted last April, where price made a higher high while the RSI faltered, resulted in a healthy correction to the 100-day moving average before the next leg up. With gold now forming a base above the psychological $5,100 level, a bull call spread could be an effective way to position for a retest of the all-time highs near $5,280. For example, using the June options to buy the $5,200 call and simultaneously sell the $5,250 call would limit cost and define risk.
