Gold slipped to about $4,860 in early Asian trading on Wednesday. Trading was quiet because many Asian markets are closed for the Lunar New Year. Traders are now waiting for the Federal Open Market Committee (FOMC) Minutes due later today.
Liquidity remained low because of regional holidays. Markets are also watching whether a stronger US dollar could reduce demand for gold.
Us Iran Tensions Ease
Gold also faced pressure as tensions between the US and Iran eased. Gold is often bought when uncertainty is high. Iran’s Foreign Minister Abbas Araqchi said on Tuesday that both sides agreed on key “guiding principles” in nuclear talks, but added that a deal is not close.
The FOMC Minutes may give clues about where US interest rates are heading. If the Minutes sound more dovish, the US dollar could weaken, which may support commodities priced in dollars, including gold.
Gold is widely used in jewellery and is often viewed as a store of value. Many investors also use it as a safe-haven asset and as a hedge against inflation and weaker currencies.
Central banks hold large amounts of gold. In 2022, they bought 1,136 tonnes worth about $70 billion, the highest annual total on record. Gold often moves in the opposite direction to the US dollar and US Treasuries. It can also move differently from risk assets such as equities.
Market Focus Today
With gold trading near $4,860, the key focus is the FOMC Minutes later today. Trading is thin because of the Lunar New Year holiday, which can make price moves look bigger if news surprises the market. The main question this week is what the Fed signals about the future path of interest rates.
Markets are leaning toward a more dovish Fed, especially after January CPI came in a bit cooler than expected at 2.8%. If the Minutes suggest policymakers are moving toward rate cuts later in 2026, the US dollar could weaken. That would likely support gold. Some traders may look at call options if they expect a break above recent highs.
Even so, gold appears to have a strong level of support, which reduces the appeal of outright short positions. Central bank buying stayed strong into late 2025. The World Gold Council also reported another quarter of solid purchases, led by emerging market central banks. This steady demand suggests that large dips may be bought quickly.
Geopolitical risks still provide support, even with improving US-Iran relations. Markets are also watching rising political uncertainty ahead of key European elections and renewed tensions in the South China Sea. These issues help keep gold’s safe-haven appeal strong, making it a useful hedge in a diversified portfolio.
Derivatives markets also reflect the current mood. The CBOE Gold Volatility Index (GVZ) has risen to 17.5, showing more caution ahead of the Fed release. Traders who expect a big move but are unsure of the direction may consider options strategies such as straddles or strangles to target higher volatility.
In 2023 and 2024, aggressive rate hikes helped the dollar and limited gold’s upside. In early 2026, the conversation has shifted to when and how fast the Fed will ease. This change in policy expectations supports a bullish outlook for gold in the months ahead.
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