Gold rose for a fourth straight day after posting its highest-ever weekly close above $5,100 on Friday. In early Monday trading in Asia, it pushed above $5,150. The move was supported by trade uncertainty, Middle East tensions, expectations of Fed rate cuts, and a weaker US dollar.
Donald Trump announced a new tariff framework after a Supreme Court ruling limited broad duties. A 15% global levy (the legal maximum) was placed on goods imported into the US. This raised concerns about retaliation and supply-chain disruption.
Inflation Fed Cuts And Dollar Backdrop
US inflation data showed the PCE Price Index rose 2.9% year on year in December, while core PCE came in at 3.0%. Markets still expect two 25-basis-point Fed rate cuts this year, although a March cut is seen as unlikely.
US GDP grew at a 1.4% annualised rate in Q4, slowing from 4.4% in Q3, during the longest-ever US government shutdown. The dollar slipped from its highest level since 23 January, which helped support gold.
Talks between US and Iran negotiators are scheduled in Geneva on Thursday after Iran submitted a detailed nuclear proposal. Reports say Trump is considering a strike in the coming days, with a larger option later if diplomacy fails.
Technically, gold is trading above the 200-period EMA at $4,864.04. RSI is 73.23, and MACD remains above zero.
Strategy Positioning And Risk Management
With gold in a strong uptrend, we should keep a bullish bias in our derivatives positioning. The break above $5,100 is an important technical signal. It is also backed by fundamentals such as global trade levies and geopolitical tension. Together, these factors suggest the easier path remains higher over the next few weeks.
Central bank buying adds support to this view. In 2025, official reserves rose by close to 1,050 tonnes, with emerging markets leading the purchases. Also, the latest January CPI report printed at 3.1%, suggesting inflation remains sticky above the Fed’s target and supporting gold’s role as a hedge.
To take advantage of the momentum, call options with strikes at $5,200 and $5,250 offer leveraged upside with defined risk. For traders with a higher risk tolerance, long gold futures positions provide more direct exposure to price gains. Overall, the current backdrop still favors holding and adding to long-focused strategies.
That said, the RSI is above 73, which signals overbought conditions. A short-term pullback or consolidation is possible before the next move higher. To manage this risk, consider protective put options below the key $5,000 psychological level to hedge long exposure against a sharp reversal.
Looking ahead, watch the US-Iran nuclear talks in Geneva this week, as a negative outcome could trigger another rush into safe-haven assets. The March FOMC meeting will also be important. If the Fed hints at fewer than the two cuts currently priced in, gold could pull back sharply and create a better entry point for new long positions.
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