Gold rose more than 1% on Friday. XAU/USD traded near $5,065 after briefly dipping to $4,981. The move followed softer US growth and inflation data. The US Dollar Index (DXY) fell 0.11% to around 97.70. The US Supreme Court ruled against Trump’s tariffs imposed under an emergencies law, and US equities turned positive. Trump said Sections 232 and 301 tariffs will stay in place, and he plans a 10% global tariff under Section 122.

Stagflation Signals Support Gold

US GDP growth for Q4 was revised down from 4.4% to 1.4% YoY, partly linked to the 43-day government shutdown. Core PCE inflation was reported above 3%. Another estimate said December’s increase eased from 4.4% to 1.4% YoY. University of Michigan sentiment slipped from 57.3 to 56.6, with households pointing to higher prices. One-year inflation expectations dropped from 4% to 3.4%, while five-year expectations held at 3.3%. The US 10-year yield rose 1 basis point to 4.081%. Markets still price in two 25-basis-point Fed cuts this year, but there is scepticism about any cut before June 2026. Next week’s focus includes ADP Employment Change (4-week average), Initial Jobless Claims, and January PPI. Gold levels to watch include $5,100, $5,200, $5,451, $5,598, $4,841, and the 50-day SMA at $4,681.

Options Positioning And Key Risk Levels

Markets are flashing stagflation signals. US growth has slowed sharply to 1.4% while core inflation remains above 3%. This mix tends to support gold and helps explain the push above the key $5,000 level. The weaker US dollar, with DXY near 97.70, is adding to gold’s strength. Recent data supports the slower-growth view. Initial jobless claims rose to 245,000, the highest in three months. At the same time, inflation is still elevated. January CPI came in at 3.5% year over year, echoing the message from the PCE data that inflation pressures have not fully eased. That backdrop can make non-yielding gold more appealing as a store of value. Geopolitical risks are also lifting safe-haven demand. A proposed 10% global tariff and the possibility of military action against Iran add uncertainty, which often helps keep a floor under gold prices in the near term. This setup is similar to the 2022–2023 inflation shock. Gold held up even as central banks raised rates, then rallied as recession fears grew. A comparable pattern may be developing now, with markets still expecting rate cuts later this year despite sticky inflation. For derivatives traders, this points to a bullish bias. Long call options can offer defined risk while keeping exposure to further upside. Strike prices above the next resistance around $5,100 could make sense, with potential targets near $5,200 or $5,450 over the coming weeks. Still, the US 10-year yield is holding above 4.08%. If yields keep rising, they could weigh on gold. Protective put options can help hedge against a sharp pullback. Uncertainty around the timing of rate cuts also argues for staying prepared for volatility. With uncertainty high, implied volatility in gold options may be elevated. For traders comfortable owning gold at lower levels, selling out-of-the-money puts is one way to collect premium. For example, strikes below nearby support—such as the February 17 low at $4,841—may offer room for the market to absorb stagflation concerns while keeping risk defined. Next week, attention will be on ADP employment and January PPI. Weaker growth or persistent inflation in those reports could be the next catalyst for a retest of recent highs. A strong jobs print, however, could cool expectations and trigger a short-term pullback. Create your live VT Markets account and start trading now.

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