Dollar Yields And Gold
The US Dollar Index (DXY) rose nearly 0.40% to 99.55. US 10-year Treasury yields fell four basis points to 4.328%, supporting gold. A weak US two-year Treasury auction pushed the 2-year yield towards 3.936%. US import prices rose 1.3% in February, the biggest rise since March 2022, versus forecasts of 0.5%, after January’s 0.2% increase. Markets removed expectations of 2026 Federal Reserve rate cuts and priced in 4 basis points of tightening. Thursday’s calendar includes US Initial Jobless Claims for the week ending 21 March and speeches by Cook, Miran, Jefferson, Logan, and Barr. Technically, gold is range-bound between the 100- and 200-day SMAs, with support near the 200-day SMA at $4,083. Levels include $4,592, $4,600, $4,961, $4,500, $4,305, and $4,098.Conflicting Forces For Bullion
The market is currently pulled in two directions, creating a tense setup for gold. The possibility of peace talks between the US and Iran is putting pressure on gold’s safe-haven status, while sticky inflation is providing strong underlying support. This conflicting environment suggests that volatility could be the main trade in the coming weeks. We see that stubborn inflation remains the key issue, with February’s US import prices showing the largest jump since March 2022. Recent CPI data for February 2026 confirmed this trend, coming in hotter than expected at 3.5% and fueling speculation that the fight against inflation is far from over. Consequently, traders have completely priced out any Fed rate cuts for 2026 and are now anticipating further tightening. The sharp drop in oil prices is directly linked to the hope for de-escalation, which temporarily improves risk appetite and acts as a headwind for bullion. However, we must remember that Iran has not officially agreed to any proposal, meaning any negative headline could cause both oil and gold to reverse course sharply. This makes holding outright short positions on gold particularly risky. Looking back at 2025, we saw a similar pattern where geopolitical tensions would fade, but the persistent theme of central bank buying provided a solid floor for gold prices. This trend continues, as central banks in emerging markets added significantly to their reserves in the last quarter of 2025, supporting the idea that dips will be bought. This historical action creates a strong argument against expecting a major price collapse. Given that gold is trading in a range between its key 100-day and 200-day moving averages, strategies that benefit from this sideways action are attractive. Traders could consider selling options volatility through strategies like iron condors, defining the expected range between roughly $4,100 and $4,600. A decisive break of these levels would be a signal to close out such positions and follow the new trend. This week’s speeches from several Fed officials will be critical for the market’s direction. Given the recent inflation numbers, we should be prepared for hawkish commentary that could boost the US Dollar. A stronger dollar might push gold down to test its recent low around the $4,305 level. Create your live VT Markets account and start trading now.
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