Gold (XAU/USD) traded in a choppy range on Tuesday, near $4,658, as markets awaited developments ahead of Donald Trump’s deadline for Iran. The deadline was set for 8:00 p.m. Eastern Time (00:00 GMT on Wednesday), with warnings linked to the Strait of Hormuz.
Trump said Iran must “make a deal or open up the Strait of Hormuz” and threatened to target Iran’s energy and civilian infrastructure if no agreement is reached. IRNA reported Tehran rejected a ceasefire proposal via Pakistan and issued a 10-point plan calling for a permanent end to the war, lifting sanctions, and a framework for safe passage through the Strait.
Market Reaction And Safe Haven Dynamics
Gold struggled to gain safe-haven demand, as the US Dollar stayed firm and liquidity demand remained elevated. Higher oil prices added to inflation worries and reduced expectations for interest-rate cuts.
March US CPI is due later this week, with forecasts of 0.9% month-on-month (from 0.3%) and 3.3% year-on-year (from 2.4%). Markets have largely removed expectations for rate cuts this year.
Central bank demand continued, with China adding about 160,000 troy ounces (about 5 tons) in March for a 17th straight month, and global central banks buying a net 25 tons in the first two months. On the 4-hour chart, price levels include the 100-period SMA near $4,654, the 200-period SMA near $4,908, the 50-period SMA around $4,585, and downside areas at $4,400 and $4,100. RSI stayed near 50, while MACD remained below its signal line.
We remember last year when the market was on edge over President Trump’s ultimatum to Iran, which created significant short-term uncertainty. Gold traded choppily around the $4,650 level as everyone waited for news on a potential deal. That situation provides a clear playbook for how markets react to this specific geopolitical threat.
A last-minute agreement was reached in 2025, which temporarily averted a crisis and caused a sharp drop in gold’s risk premium. However, with renewed diplomatic talks over the Hormuz passage scheduled for next month, similar tensions are resurfacing in April 2026. This history suggests any positive headlines could quickly pressure gold prices lower, while any breakdown in talks would provide a strong catalyst for a rally.
Trading Approaches And Volatility Positioning
Given this backdrop, traders should anticipate a rise in implied volatility in the coming weeks. Options strategies like long straddles could be effective for playing a potential price spike in either direction, as we have already seen gold’s implied volatility tick up 5% over the past week. This allows a trader to profit from a large move without having to predict the direction correctly.
The inflation dynamic that weighed on gold last year also persists. With the latest March 2026 Consumer Price Index (CPI) data coming in at a stubborn 3.5%, the Federal Reserve has signaled it will hold rates firm through the summer. This high-rate environment continues to create a headwind for non-yielding gold, capping its upside potential.
Despite these pressures, the long-term support from central banks should not be ignored. The World Gold Council just reported that global central banks added a record 310 tonnes in the first quarter of 2026, with China and India leading the purchases. This persistent buying provides a strong floor under the market, making aggressive short positions risky.
Currently, gold is struggling to break past the $4,850 resistance level. For traders expecting this tension to fade as it did in 2025, selling call spreads above $4,900 offers a defined-risk way to capitalize on a potential downturn. Conversely, if the key support at $4,720 fails, buying put options could be a prudent move to hedge against a sharper correction.
