Gold fell slightly in early European trade on Thursday but stayed above its lowest level since 30 March, reached on Wednesday. The US dollar held near a six-week high after hawkish Federal Reserve minutes supported expectations of another rate rise by year-end.
Minutes from the Fed’s 28–29 April meeting said most policymakers would consider tighter policy if inflation stayed persistently above the 2% target. The CME Group FedWatch Tool shows traders pricing in over a 50% chance of a 25 basis point rise in 2026.
Dollar And Geopolitics
The dollar’s pullback was limited after comments on US-Iran talks. President Trump said the US was in the “final stages” of talks with Iran, and Vice President JD Vance said Iran wanted a deal, though Trump also warned of more military action.
Iran rejected the threat and warned that renewed US and Israeli attacks could escalate the war. Iran also launched a “Persian Gulf Strait Authority” to control traffic through the Strait of Hormuz.
Technically, XAU/USD remains in a downward channel and below $4,682.12. RSI (14) is 46.60, while MACD has turned mildly positive.
Resistance is seen at $4,632.58 and $4,682.12. Support sits near $4,500, then $4,380.81.
Looking Back To 2025
Looking back to this time in 2025, we saw the market wrestling with a hawkish Federal Reserve and tense US-Iran negotiations. The Fed did follow through on those signals, raising rates by 25 basis points in February 2026 as inflation remained persistent. This confirmed the hawkish bias we were seeing and set the stage for the current market environment.
The optimistic hopes for a US-Iran peace deal faded by late 2025, and the new “Persian Gulf Strait Authority” has become a major flashpoint. The increased geopolitical risk has provided a strong tailwind for gold, pushing it well beyond the $4,682 resistance level noted last year. Recent reports from maritime insurers show that shipping premiums for passage through the Strait of Hormuz have increased by over 15% since the beginning of 2026.
While the Fed’s focus on inflation remains, gold is no longer trading purely on interest rate expectations. The dollar’s strength is now being countered by gold’s role as a safe haven amid the unresolved Middle East conflict. With the latest April Consumer Price Index data showing inflation still elevated at 2.8%, the Fed has little room to lower rates, creating a solid support for bullion.
For derivative traders, this environment suggests volatility is the main factor to watch in the coming weeks. Strategies like purchasing straddles, which involve buying both a call and a put option at the same strike price, could be effective. This approach allows a trader to profit from a significant price swing in either direction, driven by a potential military incident or a surprise diplomatic breakthrough.
Alternatively, for those anticipating further escalation, buying call options offers a defined-risk way to capture upside. Given how much gold has appreciated since the lows of 2025, it would be prudent to pair this with buying cheaper, out-of-the-money put options. This can protect profits from a sudden reversal if tensions unexpectedly ease.
