Gold (XAU/USD) was near-flat at $4,790 on Monday, supported by demand for the US Dollar amid threats to the US-Iran peace process. Over the past two weeks, it has traded in a horizontal channel, with resistance at $4,850.

Iran’s foreign ministry said it may skip the peace process after the US seized an Iranian cargo on Sunday, which Tehran called an “aggressive act” and a ceasefire violation. Markets still price in a chance of talks resuming on Tuesday, limiting further US Dollar gains.

Technical Outlook For Gold

Technically, gold remains neutral to slightly bearish below $4,850. On the 4-hour chart, the MACD is negative and the RSI is near 50, suggesting weaker upward momentum.

Support has held around $4,730, with the channel base near $4,600. A break above $4,850 (April 8, 14, and 15 highs) would point towards resistance just above $5,000.

Central banks are the largest holders of gold and often buy it to diversify reserves. They added 1,136 tonnes worth about $70 billion in 2022, the highest yearly purchase on record, with China, India, and Turkey among buyers.

Gold often moves inversely to the US Dollar and US Treasuries and can also be inversely linked to risk assets. Its price can react to geopolitical tension, recession fears, and interest-rate changes, while remaining sensitive to US Dollar moves because it is priced in dollars.

Market Shift Since 2025

We remember looking at gold trading sideways around $4,790 in April 2025, caught between geopolitical jitters and a strong dollar. That tight range between $4,600 and $4,850 feels like a distant memory from today’s vantage point. Now, with the price consolidating well above the $5,200 mark, the market dynamics have clearly shifted.

The trend of central bank accumulation has only accelerated since we saw those reports from 2022. The World Gold Council’s final numbers for 2025 showed another record year of net purchases, easily surpassing the 1,082 tonnes bought in 2023. This persistent demand from official sectors continues to build a solid floor under the market, absorbing any significant dips.

Unlike last year, the primary concern now is stubbornly high inflation, with the latest March 2026 CPI data coming in at a sticky 3.8%. This environment has traders pricing in a pause from the Federal Reserve, with a potential rate cut now being considered for the third quarter. A pivot away from higher interest rates reduces the opportunity cost of holding non-yielding gold.

Given this supportive backdrop, we see traders moving away from the flat or bearish bias some held in 2025. A viable strategy for the coming weeks is purchasing call options to capture potential upside beyond the current consolidation range. For those wanting to reduce costs, a bull call spread could limit premium outlay while still profiting from a measured move towards the $5,400 level.

However, complacency is a risk, as geopolitical tensions in new hotspots could flare up unexpectedly, causing sharp, volatile swings. To prepare for this, some are considering long straddles, which would profit from a large price move in either direction. More cautious traders are simply buying out-of-the-money puts to hedge their long positions against a sudden reversal.

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Brent futures have moved sharply on US–Iran conflict news and recently rebounded to $95/bbl. Physical supply remains tight, with shipping through the Strait of Hormuz severely constrained.

OPEC supply is estimated to have fallen by about 42% in March, with a similar drop expected in April. The base case assumes output starts to recover in May but does not fully return to normal for around nine months.

Supply Normalisation Timeline

Across five major Middle East energy crises since 1956, supply normalisation took close to eight months on average. Expectations for Persian Gulf flows have shifted to slower improvement by mid‑May rather than late April.

The end‑2026 Brent forecast has been revised from $79/bbl to $85/bbl based on the slower path for supply to recover. Full normalisation is assumed only towards the end of 2026.

Even if hostilities end by late April, global inventories are not expected to start a sustained move back towards normal until late May at the earliest. Factors cited include shut‑ins, shipping limits, insurance constraints, port damage, and debris clearance.

We should look past the daily price swings driven by conflict headlines, which recently pushed Brent to $95 per barrel. The physical market is extremely tight due to severe logistical constraints in the Strait of Hormuz, with shipping insurance premiums reportedly tripling in the last month alone. This underlying tightness suggests that any price dips may be short-lived opportunities.

Trading Implications

We are seeing a significant supply shock, with an estimated 42% drop in OPEC supply last month and a similar decline expected for April. Recent tanker tracking data confirms this, showing OPEC seaborne exports are down by over 4 million barrels per day so far this month. This is not a theoretical problem; barrels are actively being removed from the market right now.

History shows that unwinding these disruptions is a slow process, with past Middle East energy crises taking an average of eight months to normalize supply. Our base case is now a nine-month recovery period, meaning we won’t see full production return until early 2027. This suggests that betting on a quick return to lower prices is a high-risk strategy.

Global inventories are unlikely to start rebuilding until late May at the earliest, and recent data supports this view. For instance, the latest government reports show U.S. commercial crude inventories have drawn down by over 15 million barrels in the past four weeks, a rate far exceeding the seasonal average. These draws confirm that demand is outpacing the currently constrained supply.

Given the revised end-of-year forecast towards $85 per barrel, traders should consider positioning for sustained or higher prices. The current environment favors strategies that benefit from this upward price pressure, such as buying call options or establishing bull call spreads. These positions can capitalize on the slow supply normalization expected through the second half of the year.

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The US Dollar rose from 0.7775 against the Swiss Franc on Friday, but it stayed below 0.7845 on Monday. This keeps the short-term downward trend in place.

Market mood turned cautious on Monday as expectations of a quick end to the Middle East war eased. The Dollar got slight support after the US seized an Iranian cargo vessel in the Gulf of Oman on Sunday, and Iran threatened to miss peace talks due on Tuesday.

Technical Levels And Market Context

Most Dollar pairs stayed near last week’s peaks as markets continued to expect talks between Washington and Tehran to resume this week. USD/CHF has fallen from around 0.8050 since late March and found support near 0.7775 at the 61.8% Fibonacci retracement from the 27 January low to the 31 March high.

On the 4-hour chart, the RSI moved from oversold levels to the low-40s. The MACD sits just above zero with a mild upward slope, pointing to weaker selling pressure rather than a clear rise.

A break above 0.7845 (16 April high) could shift focus to about 0.7930 (8 and 10 April highs) and a falling trendline near 0.7950. Below 0.7775, targets include 0.7700 (78.2% retracement) and 0.7670 (27 February low).

Looking back at the analysis from April 2025, we can see the market was balancing on a knife’s edge. The cautious optimism that Washington and Tehran would return to the negotiating table proved to be misplaced. The talks officially collapsed in the final week of that month, triggering a significant safe-haven flow that pushed USD/CHF decisively through the 0.7700 support level we were monitoring.

That geopolitical breakdown set the bearish tone for the last twelve months, establishing a new, lower trading range for the pair. The persistently strong Franc has had a tangible economic impact, with Swiss manufacturing PMI dipping below the 50-point growth threshold for two consecutive quarters in late 2025. We now see the pair consolidating around the 0.7550 level, well below the action from last year.

Positioning And Strategy Considerations

For the coming weeks, traders should consider selling out-of-the-money puts to collect premium, as the 0.7500 level has proven to be a durable floor supported by central bank vigilance. However, given the recent whispers of renewed back-channel communications between US and Iranian officials, buying long-dated, low-cost call options is a prudent strategy. This offers exposure to a potential sharp upward reversal should a diplomatic surprise emerge, without risking significant capital in the current sideways grind.

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OCBC strategists Sim Moh Siong and Christopher Wong report that the Japanese government bond (JGB) yield curve has steepened since the energy shock linked to the US–Iran war. They say this has raised questions about Bank of Japan (BoJ) policy credibility, contrasting with JGB curve flattening seen across other G10 markets after February.

They expect the BoJ to raise rates by 25 bp on 28 April, though market pricing still allows for a hawkish hold. They add that concern is growing that the BoJ is not keeping pace with current conditions, which increases pressure for a move in April.

BoJ Policy Credibility Under Scrutiny

They warn that if the BoJ does not hike, USD/JPY could rise into the 160s. They say this could lead the Ministry of Finance to intervene, aiming to bring the pair back towards 155.

They also reference recent messaging from Finance Minister Katayama as indicating readiness to act. They keep an end-2026 USD/JPY target of 155.

The Bank of Japan is facing a growing credibility challenge, as the sharp steepening in the JGB curve shows. Following the energy shock from the US-Iran war, the spread between Japan’s 2- and 10-year government bonds has widened to over 120 basis points, a stark contrast to the curve flattening we saw across other major economies in late 2025. This signals that the market believes the BoJ is not acting fast enough to control inflation.

With the crucial policy meeting on April 28 just days away, traders should prepare for a significant spike in currency volatility. One-week implied volatility for USD/JPY has already surged to 16%, well above the year’s average, reflecting the market’s nervousness about a binary outcome. A straddle or strangle option strategy could be effective, as it profits from a large price movement in either direction without betting on the specific outcome of the meeting.

Volatility And Intervention Risk

If the BoJ fails to deliver the expected 25 basis point hike, we could see USD/JPY quickly push into the 160-162 range. Traders might consider buying short-dated call options with strike prices around 159 to capitalize on this potential overshoot. This “hawkish hold” scenario would be interpreted as a policy failure, likely triggering a rapid sell-off in the yen.

However, any move above 160 would almost certainly trigger intervention from the Ministry of Finance. We saw forceful action back in 2022 when the ministry spent over ¥9 trillion to defend the yen as it approached 152. Recent warnings from Finance Minister Katayama suggest a similar playbook, creating a significant risk that any gains on USD/JPY call options could be abruptly erased as the pair is pushed back toward 155.

Alternatively, if the BoJ follows through with a 25 basis point hike, the yen is likely to strengthen immediately. In this case, USD/JPY put options would be the appropriate tool, with traders targeting a move back towards the 155 level. This outcome would help restore some of the central bank’s damaged credibility.

Even with a potential rate hike, we remain cautious on the yen’s long-term prospects. Our end-of-year target for USD/JPY remains at 155, suggesting that any post-hike yen strength may be limited. This implies that selling longer-dated yen calls on dips in the currency pair could be a prudent strategy over the coming months.

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Sterling traded unevenly against major currencies in Monday’s European session. The currency may stay volatile as the UK releases employment, inflation and retail sales data this week.

Employment figures for the three months to February are due on Tuesday. Average Earnings Excluding Bonuses are forecast at 3.5% year on year, down from 3.8%, while the ILO unemployment rate is seen at 5.2%.

Key Uk Data This Week

Wednesday’s CPI report is expected to show headline inflation at 3% year on year, unchanged from February. Retail sales for March, due Friday, are forecast to rise 0.2% month on month after a 0.4% fall in February.

Markets will also watch the preliminary UK S&P Global PMI data for April on Thursday. Recent remarks from Bank of England Governor Andrew Bailey at the IMF indicated rates may be kept steady at the 30 April policy meeting.

Against the US dollar, GBP/USD recovered most early losses and rose to about 1.3515. The pair remained uncertain amid questions over further US–Iran talks, after Iran’s foreign ministry spokesperson Esmail Baghaei said there is “no plan for a second round of negotiations with the United States for now.”

The Pound is facing a familiar period of volatility, driven by a heavy schedule of economic data releases. We saw a similar setup around this time in 2025 when uncertainty over inflation and wage growth kept the Bank of England on hold. This week’s data on jobs, inflation, and retail spending will be critical in shaping the BoE’s next move.

Strategy Ideas For Sterling Volatility

Looking back to last year, the April 2025 data showed wage growth slowing to 3.5% while inflation remained stubbornly high at 3%, which created choppy conditions for the currency. The Bank of England ultimately held interest rates steady at its April 30 meeting, just as Governor Bailey had hinted. This rewarded traders who were positioned for volatility rather than a clear directional move.

The situation today in April 2026 has parallels, though the numbers have shifted. We have seen inflation fall significantly over the past year, but the latest reading for March 2026 came in at 2.8%, still stubbornly above the Bank’s 2% target. Meanwhile, wage growth has moderated to 4.5%, which is lower but still a key concern for policymakers fearing a second wave of inflation.

Given the expected swings following the data releases this week, using options strategies to trade the volatility itself appears prudent. A long straddle, which involves buying both a call and a put option with the same strike price and expiry, could profit from a significant price move in either direction. This avoids the risk of betting on whether the economic news will be positive or negative for the Pound.

For those with existing exposure to the Pound Sterling, the uncertainty surrounding the BoE’s interest rate path makes hedging a sensible approach. Locking in an exchange rate using forward contracts can protect against adverse currency movements in the coming weeks. The BoE is currently not expected to cut rates at its next meeting, but a surprisingly weak inflation or jobs report could change that outlook very quickly.

Against the US Dollar, the Pound Sterling is trading near 1.2850, with its direction influenced by both UK data and global risk sentiment. Last year we saw tensions between the US and Iran weighing on the pair. Today, ongoing global trade negotiations and fluctuating energy prices are creating a similarly uncertain backdrop, reinforcing the case for cautious positioning.

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Silver (XAG/USD) has slipped to about $79.50, down nearly $4 from last Friday’s one-month high just above $83.00, and is holding below $80.00. The move comes as demand returns to the US Dollar and prospects for a near-term US-Iran settlement ease.

Iran’s foreign ministry said Tehran will miss the second round of talks due in Pakistan on Tuesday. This follows the US army’s seizure of an Iranian-flagged cargo vessel on Sunday, which Iran said breached the ceasefire.

Technical Picture And Key Levels

Technically, silver remains inside an upward channel from the March 23 low. On the 4-hour chart, the RSI is around 50 and the MACD is below zero.

Support sits near $78.80, with further support just under $78.00 based on the April 8 high and April 16–17 lows. The next downside level is the April 10 low near $72.60.

Resistance is at $80.80, and a break above that would bring Friday’s peak of $83.06 into view. The technical section was produced with help from an AI tool.

Silver has pulled back from its recent high above $83, settling just below $80. This move comes as investors temper their optimism for a swift resolution to the US-Iran conflict, pushing capital back into the US Dollar. The immediate trigger for this caution was Iran skipping peace talks after the US seized one of its cargo vessels.

What To Watch Next

The price of silver is now hovering near the bottom of an upward channel that began in late March. The key technical level to watch is the channel’s floor around $78.80, with immediate resistance holding at $80.80. A decisive break of this range will likely dictate the direction for the next several weeks.

Fundamentally, the long-term picture is supported by strong industrial demand and sticky inflation. Recent data from the International Energy Agency shows a 15% year-over-year increase in global solar panel installations for the first quarter of 2026, a sector heavily reliant on silver. Meanwhile, the latest CPI report showed core inflation remains stubbornly above the Fed’s target at 3.1%, which typically supports hard assets.

We saw a similar pattern back in early 2022 when geopolitical events first flared up in Europe. Precious metals initially rallied on safe-haven buying, but a surging US Dollar and concerns over economic growth eventually capped the gains. This historical context suggests the dollar’s strength will be a critical factor to watch alongside the direct geopolitical news.

Given the uncertainty, option traders may see opportunity in the elevated volatility. The current tension between a bullish technical channel and bearish geopolitical news could lead to a sharp price move in either direction. This environment could be favorable for strategies like long straddles, which profit from a significant price breakout, regardless of the direction.

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HSBC Asset Management reports that April’s improvement in risk appetite matched a sharp fall in the US Dollar. It says year-to-date performance is broadly flat and still fits a longer-term weaker-dollar trend.

It expects geopolitical and macro uncertainty to keep volatility risks in play. It adds that March market moves suggest any dollar uplift during volatility may be muted.

Dollar Behavior In Volatility Regimes

It says the past couple of years show the dollar staying fairly static during volatility episodes. It links this to a shift in how the dollar behaves in stressed markets.

It lists possible drivers as gradual de-dollarisation, concerns over US public finances, and concerns over institutional integrity. It also cites a view that the Federal Reserve may be constrained in responding to inflation shocks, compared with 2022.

HSBC says a “broadening out” market narrative depends in part on sustained dollar weakness. It states that recent price action keeps this scenario plausible in 2026.

The dollar’s sharp drop this April confirms the longer-term weak trend we have been tracking. This suggests we should position for continued softness, as the dollar’s reaction to market stress has fundamentally changed. Any bounce in the dollar during periods of uncertainty is likely to be short-lived and limited.

Options Strategies For A Weaker Dollar

We saw this during the market jitters last month, where the Dollar Index barely climbed above 105 before retreating, a stark contrast to the sharp rallies seen during the banking stress back in 2023. This muted response suggests the old playbook of buying the dollar as a safe haven is becoming less reliable. This shift points towards a new market regime where dollar upside is capped.

This trend is supported by hard data on central bank reserves. The latest IMF report for Q4 2025 showed the dollar’s share of global reserves fell to 55%, a steady decline from the 58% level seen at the start of 2025. This indicates a gradual but persistent move away from dollar-denominated assets by major global players.

Concerns over US fiscal policy are also weighing on the currency, with the Congressional Budget Office’s Q1 2026 report projecting the debt-to-GDP ratio to exceed 115% by year-end. This, combined with a Federal Reserve that appears less aggressive on inflation than it was in 2022, is eroding confidence. We believe the Fed is hesitant to trigger a recession, even with core inflation remaining stubbornly above 3%.

For traders, this means selling out-of-the-money call options on the US dollar against currencies like the Euro or Swiss Franc could be an attractive strategy. This approach profits from the dollar staying flat or declining, capitalizing on the view that a significant rally is unlikely. These positions offer a way to earn premium while betting against a strong dollar surge.

We should also consider using options to build long positions in emerging market currencies that benefit from a weaker dollar. Currencies like the Mexican Peso and Brazilian Real have shown strength, and buying call spreads on these pairs against the dollar offers a defined-risk way to participate in their potential appreciation. This strategy aligns with the broader narrative of sustained dollar weakness through 2026.

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Sterling has remained firm even as markets cut Bank of England tightening expectations to one 25bp rate rise this year, while ING expects no change in rates. ING says the 25bp hike may stay priced in until oil prices fall.

UK politics is also in focus, with Prime Minister Keir Starmer due to make a statement in parliament about the approval process for former UK ambassador to the US, Peter Mandelson. A senior civil servant involved in the process is scheduled to appear at a parliamentary hearing tomorrow.

Sterling Outlook And Near Term Risks

ING warns that GBP/USD could give back recent gains this week. It points to 1.3380/1.3400 as an initial downside target.

The article was produced with the help of an Artificial Intelligence tool and reviewed by an editor.

Looking back to early 2025, we saw Sterling perform reasonably well even while the market was removing expected Bank of England rate hikes. Our view at the time was for rates to remain unchanged, and that proved correct as the Bank Rate held at 5.25% throughout the entire year. That period of political noise did contribute to GBP/USD giving back its gains, with the pair falling back towards our 1.3400 target during the second quarter of 2025.

The situation today on April 20th, 2026, is fundamentally different, as the conversation has shifted from holding rates to cutting them. The latest data from the Office for National Statistics shows UK CPI inflation has now fallen to 2.1%, putting it right near the Bank’s target. Consequently, interest rate markets are now pricing in at least two 25 basis point cuts before the end of this year, putting sustained pressure on the pound.

Derivative Positioning For A Weaker Pound

For derivative traders, this outlook suggests positioning for further Sterling weakness against the dollar. Buying GBP/USD put options with strike prices around 1.2650 and 1.2700 could provide effective downside protection. Given the Bank of England’s upcoming meeting in May, implied volatility may rise, so establishing these positions in the coming weeks seems prudent.

We also note that political uncertainty is a factor once again, similar to the parliamentary scrutiny the Prime Minister faced last year. The upcoming local elections in May are creating nervousness about the government’s fiscal stability and could weigh on investor sentiment. This reinforces the case for a weaker Sterling and makes bearish derivative strategies more compelling through the second quarter.

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Silver fell on Monday, with XAG/USD at $79.45 per troy ounce. This was down 1.67% from $80.80 on Friday.

Silver is up 11.77% since the start of the year. The price was listed as $2.55 per gram.

Silver Market Snapshot

The Gold/Silver ratio was 60.32 on Monday. It was 59.78 on Friday.

Silver is traded as a precious metal and has been used as a store of value and a medium of exchange. It can be bought as coins or bars, or traded through Exchange Traded Funds that track its price.

Prices can be affected by geopolitical risk and recession concerns, which can push demand towards safe-haven assets. Silver often rises when interest rates fall, and it is influenced by the US Dollar because it is priced in dollars.

Industrial use also affects silver, including demand from electronics and solar energy. It has higher electrical conductivity than Copper and Gold, and demand conditions in the US, China and India can affect price moves.

Key Drivers For Silver

Silver often moves in the same direction as gold. The Gold/Silver ratio is used to compare their relative values.

We are seeing silver prices pull back to $79.45 after a strong run, but we must remember this comes after an 11.77% gain since the beginning of the year. This slight dip of 1.67% today could be simple profit-taking rather than a change in the overall trend. The Gold/Silver ratio also edged up to 60.32, indicating gold showed a little more strength in the immediate short term.

The broader economic environment remains very supportive for precious metals. After watching inflation cool through most of 2025, markets are now pricing in at least two Federal Reserve interest rate cuts before the end of this year. This outlook has pushed the U.S. Dollar Index (DXY) down nearly 3% in the last quarter, making dollar-priced assets like silver more attractive.

Industrial demand continues to provide a solid price floor for silver, which we don’t see for gold. Recent Q1 2026 manufacturing reports confirmed global solar panel production increased 18% year-over-year, a trend that directly consumes large volumes of physical silver. This dual role as both an industrial and a monetary metal gives silver a unique advantage in the current climate.

We should also consider that the Gold/Silver ratio, even at 60.32, is well below the historical averages we saw between 2020 and 2025, which often hovered above 75. This suggests silver remains strong relative to gold, likely because of its critical role in new technologies. A move back toward the historical average could signal a shift, but for now, industrial use is a powerful factor.

Investment demand appears to be holding steady despite the high prices. Looking at exchange-traded funds, we can see that major silver ETFs have reported net positive inflows for five consecutive weeks. This indicates that larger investors are still building positions, viewing any price weakness as a buying opportunity amid ongoing geopolitical uncertainty.

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The Indian Rupee fell against the US Dollar at the start of the week, with USD/INR rising towards 93.00. The move followed renewed US-Iran tensions that pushed oil prices up and supported the Dollar.

WTI crude rose over 3.5% to about $88.00 in Asian trading on Monday. Oil climbed after Iran again closed the Strait of Hormuz, a route for almost 20% of global energy supply, after US actions affecting Iranian ports and a commercial vessel.

Oil Shock And Currency Pressure

Iran had announced a temporary reopening on Friday after a ceasefire between Israel and Lebanon was announced. Higher oil prices tend to weigh on currencies such as the Rupee, as India relies heavily on oil imports.

The US Dollar also strengthened on demand for safer assets, with the Dollar Index (DXY) near 98.35. Iran has not resumed talks on a permanent ceasefire, citing “excessive demands” and an ongoing naval blockade.

Foreign Institutional Investors were net buyers in Indian equities for three sessions, adding Rs. 1,731.71 crore. A two-week US-Iran ceasefire mentioned in market sentiment is due to expire on April 22.

US Retail Sales for March are due Tuesday and are forecast to rise 1.4% month-on-month, after 0.6% in February. USD/INR traded near 93.25 and above its 20-day EMA at 93.05, with support at 92.28 and 91.40 and a potential move towards 94.00.

Setups And Risk Management

With oil prices jumping over 3.5% on the renewed Hormuz closure, we see a clear signal to position for further Rupee weakness. India imports over 85% of its oil, so a sustained price near $88 per barrel directly hurts its currency. The immediate pressure will be on the USD/INR to test higher levels.

Derivative traders should consider building long positions in USD/INR, either through futures contracts or by purchasing call options. The technical picture supports a move towards the 94.00 level, especially if the pair holds above the 93.05 moving average. We saw a similar dynamic during the energy shock of 2022, which led to a rapid depreciation of the Rupee.

The April 22nd expiry of the temporary ceasefire is the most critical date to watch, as any failure to extend it will likely escalate tensions. While foreign investors have been buying Indian stocks for three days, this sentiment is fragile and could reverse sharply. These small inflows are unlikely to counter the pressure from a major geopolitical crisis.

Tomorrow’s US Retail Sales data is another key factor, with a strong forecast of 1.4% growth expected to boost the US Dollar further. This adds another layer of support for a higher USD/INR exchange rate. A strong reading would reinforce the dollar’s safe-haven status and its economic strength.

Given the high uncertainty, using options to define risk would be a prudent strategy. Buying USD/INR call options allows traders to profit from a rise in the exchange rate while limiting potential losses if the situation unexpectedly de-escalates. The Relative Strength Index suggests waning momentum, making defined-risk trades more attractive than outright futures positions.

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