Gold prices have jumped to about $4,600 early Tuesday in Asia. This increase comes after prices fell from a recent high of $4,630, driven by ongoing uncertainty and geopolitical risks. Jerome Powell, the Chair of the Federal Reserve, is currently under criminal investigation, causing global market fluctuations and a rise in safe-haven investments. This crisis was triggered by subpoenas connected to a $2.5 billion renovation of the Fed’s headquarters.

US-Iran Tensions

Tensions between the US and Iran have pushed investors toward safer assets like gold. President Trump has warned of a 25% tariff on countries trading with Iran, raising geopolitical tensions further. Traders are also paying close attention to the upcoming US CPI inflation data, with a year-on-year rise of 2.7% expected for December. If inflation increases, it could strengthen the US Dollar and negatively affect gold prices. Gold continues to be a favored asset as a hedge and safe haven. Central banks bought 1,136 tonnes of gold in 2022, marking a record high. Gold typically rises when the US Dollar weakens and during times of geopolitical unrest. Its price is affected by the performance of the US Dollar and global economic conditions.

Immediate Market Environment

With gold at $4,600, the market is shaped by uncertainty from the Fed investigation and new tariffs on Iran. This has led to higher implied volatility, making long volatility strategies through options appealing. It’s not just about predicting direction, but also about betting on continued market fluctuations. Everyone is watching the US CPI data set to be released later today, expected to be 2.7%. After inflation stubbornly remained above 3% for most of 2025, a reading at or below this forecast could give the Fed the green light to cut rates, especially under significant political pressure. If the figure turns out higher than expected, it would put the central bank in a tough spot, likely driving gold prices even higher amid the chaos. The threat of a 25% tariff on nations doing business with Iran marks a serious escalation that could disrupt global supply chains and lead to a rush to safer assets. This announcement has already driven the VIX, a measure of market fear, above 25 in recent trading sessions, a level we haven’t seen consistently since the banking crisis of 2023. In this climate, gold shines as the top safe-haven asset. It’s important to note that this rally is supported by strong physical demand. Following record purchases in 2022, central banks continued to build their gold reserves in 2024 and 2025, adding another 950 tonnes last year. This ongoing buying creates a solid price floor, suggesting that any drops will likely be seen as buying chances. In light of these conditions, we recommend that traders consider using call options for exposure to gold while managing their risk. The Powell situation is unprecedented, and the market has not fully accounted for the potential for a full-blown central bank crisis. The current situation is a perfect storm for safe havens, and derivative positions should be set up accordingly. Create your live VT Markets account and start trading now.

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