Gold (XAU/USD) stayed under mild pressure on Thursday as the US Dollar rose amid uncertainty over US-Iran talks and expectations for tighter US monetary policy. XAU/USD traded near $4,680, after reaching a three-week high around $4,773 on Tuesday.
Market pricing reflected views that US interest rates may stay higher for longer, following inflation data that showed energy costs linked to the Middle East war lifted pressures on consumers and producers for a second month. Bets also increased that the Federal Reserve could raise rates by year end, supported by steadier labour conditions.
Higher US Treasury yields and a firmer Dollar limited gains for the non-yielding metal. The US Dollar Index (DXY) traded around 98.54, near its highest level in more than a week.
Boston Fed President Susan Collins said it is possible rates may need to rise to cool inflation and that policy may stay restrictive for some time. She said job growth over the past year ran near the breakeven rate and unemployment remained relatively low.
Trump arrived in Beijing for a two-day summit covering trade, Taiwan and the war in Iran. A White House readout cited by Reuters said talks included market access, Chinese investment, keeping the Strait of Hormuz open, and preventing Iran from obtaining a nuclear weapon.
Technically, XAU/USD sat above the 21-day SMA near $4,684 and below the 50-day SMA around $4,740, with the 200-day SMA near $4,341. RSI was around 50 and MACD stabilised; resistance sat at $4,740 and $4,850, while support was at $4,684, then $4,500 and $4,341.
Given the Federal Reserve’s firm stance, we see gold’s upward momentum as capped for now. The recent April 2026 inflation report showed Core CPI stubbornly high at 3.8%, well above the Fed’s target and reinforcing the “higher for longer” interest rate narrative. This environment favors a strong US Dollar, making it difficult for non-yielding assets like gold to rally.
The robust labor market, with the last jobs report showing 195,000 new payrolls and an unemployment rate of just 4.1%, gives the Fed cover to remain hawkish. Consequently, the 10-year Treasury yield has pushed back up to 5.1%, drawing capital away from gold. For derivatives traders, this makes outright long positions on gold futures risky and expensive.
With gold currently consolidating between its 21-day and 50-day moving averages, option selling strategies appear attractive. An iron condor, selling a call spread above resistance at $4,740 and a put spread below support at $4,684, could allow traders to profit from this lack of direction. We saw similar range-bound price action create opportunities for premium collection during parts of 2025 before the latest geopolitical flare-up.
For those anticipating a breakdown, buying put options is a prudent way to position for a move lower. A decisive break below the $4,684 support level could open a path toward the next significant floor at $4,500. Using puts or put spreads offers a defined-risk strategy to capitalize on weakness driven by a persistently strong dollar.
Conversely, any negative development from the Beijing summit or an escalation in Iran could cause a rapid flight to safety. Traders should be prepared for a potential spike in gold prices should geopolitical tensions worsen. In this scenario, buying out-of-the-money call options provides a low-cost way to capture significant upside if gold breaks above the $4,850 resistance level.
We must remember the rally that brought us to these elevated prices was fueled by the geopolitical risk premium built throughout 2025. Now, the market is grappling with a central bank that is refusing to pivot, which is neutralizing that bullish impulse. This suggests the path of least resistance is sideways or down until a new major catalyst emerges.
