Gold (XAU/USD) fell about 0.20% on Monday as oil prices rose and inflation concerns increased. It traded at $4,734 after hitting $4,750 earlier in the day.

US President Donald Trump said Iran wanted to make a deal “very badly” and that it “did not agree to not having a nuclear weapon”. He also said the US would “get nuclear material back”.

Middle East Risk And Dollar Reaction

The US Dollar Index (DXY) turned negative after these comments, down 0.09% at 98.61. The US began a blockade in the Strait of Hormuz at 10:00 AM EDT on Monday to stop Iranian-flagged vessels and ships leaving Iranian ports.

US Existing Home Sales fell to 3.98 million in March, down 3.6% month on month and a nine-month low. Markets focused on the US-Iran situation instead.

San Francisco Fed President Mary Daly said a rate hold was more likely than a hike, and rates could stay steady if inflation remains high. US CPI rose 3.3% year on year in March, nearly 1% higher than February.

The US 10-year Treasury yield was 4.30%, down 1.5 basis points. Upcoming data includes ADP Employment Change (4-week average) and March PPI, forecast at 4.6% year on year.

Technical Levels And Volatility Setup

Technically, gold rebounded from $4,639, with the 20- and 100-day SMAs at $4,658–$4,668. Resistance is $4,750, then $4,800, $4,857, and the 50-day SMA at $4,897; support is $4,700, then $4,668/58 and $4,600.

Given the current date of April 14, 2026, gold is caught between the risk of a wider conflict with Iran and a Federal Reserve that is reluctant to cut rates due to inflation. The new US blockade in the Strait of Hormuz will be the primary driver of volatility, so we believe traders should consider strategies that benefit from large price swings. This means looking at options like straddles or strangles, which can profit whether the price moves sharply up or down.

The inflation picture is a significant headwind for gold, as it keeps Treasury yields high and strengthens the case for the Fed to hold rates. With March CPI jumping to 3.3%, a pattern similar to the sharp inflation spike we saw in early 2022, the upcoming 4.6% PPI forecast will be critical. This sustained pressure on prices makes buying long-dated call options expensive, suggesting traders might prefer call spreads to reduce the initial cost.

Rising Crude Oil prices are fueling these inflation fears, but we must also watch for any de-escalation in the Middle East. President Trump’s comments about Iran wanting a deal introduce serious headline risk for anyone holding long gold positions. This makes it crucial to protect against a sudden price drop, possibly by purchasing put options with a strike price below the key $4,700 level.

From a technical standpoint, the area around $4,660, where the 20- and 100-day moving averages meet, provides a strong support floor. We expect to see traders selling cash-secured puts with strike prices near this level, allowing them to collect premium while waiting for a potential dip to buy. Volatility in gold options will likely remain high, just as we saw the Gold Volatility Index (GVZ) stay above 18 during the geopolitical events of 2024.

In the coming weeks, the market will focus on the Producer Price Index report and any further developments from the Strait of Hormuz. A surprisingly high inflation number could send gold down to test the $4,660 support, while any escalation of the blockade could easily push it past the $4,800 resistance. Traders should be prepared for either outcome, as the current environment does not favor a one-sided bet.

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The US Dollar Index (DXY) fell on Monday after reports of failed Iran–US peace talks and that the US Navy was moved to close the Strait of Hormuz. Market pricing also showed reduced safe-haven demand after Iran indicated it might lower uranium enrichment.

EUR/USD rose towards 1.1765, with the move driven mainly by a softer US Dollar and no new Eurozone data. GBP/USD extended a week-long rise near 1.3500, helped by the weaker Dollar.

Major Moves In FX And Commodities

USD/JPY slipped towards 159.30 as the Yen made modest gains and the Dollar lost support. AUD/USD climbed towards 0.7090 as risk sentiment steadied and the Dollar weakened.

WTI crude dropped to $98.90 per barrel despite earlier concerns about disruption in the Strait of Hormuz. Gold traded near $4,730 as attention stayed on risk assets.

The calendar includes the US IMF Meeting on April 14–17, plus data such as China trade figures on April 14, France CPI and Eurozone industrial production on April 15, China GDP Q1 and UK GDP on April 16, and US jobless claims on April 16.

WTI is a US-sourced crude benchmark traded via Cushing and affects and is affected by supply and demand, wars, sanctions, OPEC decisions, and the US Dollar. API and EIA inventory reports are weekly; their results are within 1% of each other 75% of the time, and OPEC has 12 members.

Key Lessons From Last Year

We remember how this time last year, in April 2025, markets reacted strangely to the Iran-US headlines. The US dollar actually weakened despite the apparent safe-haven bid, as traders called the bluff on the escalation. This serves as a key lesson on how the market is now more focused on economic substance than political posturing.

Today, the US Dollar Index is strong, trading firmly above 105.5, which is a stark contrast to the weakness seen after the 2025 incident. This strength is underpinned by sticky inflation, with the latest March Consumer Price Index data showing a 3.4% annual increase, reinforcing the Federal Reserve’s “higher for longer” interest rate stance. Derivative traders should consider that dollar weakness is unlikely without a significant downturn in economic data.

As a result, the EUR/USD is struggling to hold above 1.0700, pressured by both dollar strength and growing expectations that the European Central Bank will cut rates by June. Similarly, GBP/USD is facing headwinds around the 1.2550 level, as the strong dollar narrative is overwhelming most other currencies. Options strategies that bet against major upside in these pairs, such as selling call spreads, could be advantageous.

The situation with the Japanese Yen is becoming critical, as the dollar’s strength has pushed the USD/JPY pair toward the 157.00 level. Unlike last year when the yen gained ground, it is now extremely weak, and we must be on high alert for currency intervention by Japanese authorities. Any such move would cause a sudden, sharp drop in this pair, so holding long positions carries significant volatility risk.

WTI crude oil is trading around $85 per barrel, lower than the $98.90 price we saw during the 2025 Strait of Hormuz scare. The current price is supported not by fleeting geopolitical fears but by fundamental factors, including disciplined OPEC+ supply cuts and a recent Energy Information Administration (EIA) report showing a draw of 2.1 million barrels in US inventories. This suggests price stability is more likely now than it was during the volatile news cycle of last year.

Implied volatility in the options market, as measured by the VIX index, is currently hovering at a moderate level near 15. This is far from the panic levels seen during past geopolitical flare-ups, indicating the market is not pricing in a major shock. This environment could make it relatively cheap to buy options to position for breakouts ahead of this week’s key economic data releases.

Looking ahead, the market’s focus is squarely on the economic calendar, especially today’s US Producer Price Index (PPI) and industrial production figures later this week. These releases will provide a much clearer signal for the dollar’s next move than the kind of unpredictable headlines that briefly shook markets in 2025. We believe positioning for data-driven moves, rather than headline reactions, will be the more profitable strategy in the coming weeks.

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Iran’s proposal to charge Strait of Hormuz tolls in Renminbi is creating headlines, but we see this as more of a political signal than a major economic shift. While it fuels the “petroyuan” narrative, the direct impact on global currency flows is likely to be minimal. Traders should therefore focus on the second-order effects, such as increased geopolitical risk and sentiment-driven volatility.

The broader de-dollarization trend we’ve been watching is a slow, multi-year process, not an overnight event. Looking back, SWIFT data through late 2025 showed the Renminbi’s share of global payments had grown to just over 5%, a significant increase but still dwarfed by the dollar. Similarly, the latest IMF COFER data from that period confirmed the dollar’s share of central bank reserves had only dipped slightly to around 57%, showing its entrenched position.

Limited Impact On Global Currency Flows

The argument that oil’s role in global trade is shrinking holds true, a trend we saw continue through 2025. With oil and related products making up a smaller slice of the global trade pie, a new toll on the roughly 21 million barrels per day passing through Hormuz is a new friction point, not a systemic threat to dollar dominance. This reinforces our view that the move is more about political posturing and diversifying away from Western financial systems.

For derivative traders, the primary takeaway is not to make large, directional bets on a USD collapse or a CNY surge based on this news alone. Instead, the strategy in the coming weeks should be to trade the increased uncertainty. We believe buying near-term volatility on currency pairs like USD/CNH using options, such as a straddle, is a prudent way to position for a potential spike in either direction.

This development also adds a new layer of risk directly to energy prices, which have been sensitive to Mideast tensions. The toll acts as a new tax on a critical chokepoint, raising the cost and risk of transport. A tactical approach would be to buy front-month call options on Brent or WTI futures to hedge against, or profit from, any sudden price flare-ups related to enforcement or shipping disruptions in the strait.

Trading Implications For Energy And Volatility

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Societe Generale reviewed Colombia’s presidential election ahead of the 31 May 2026 vote. Polls indicate a likely runoff, with second-round matchups favouring a unified right over the Historic Pact candidate, Gustavo Cepeda.

The note says Paloma Valencia and De la Espriella both perform better than Cepeda in runoff polling scenarios. It adds that fragmentation on the right remains the key risk factor.

Runoff Dynamics And Polling

Support for Valencia is described as rising as undecided voters consolidate around her. Cepeda is described as being close to a ceiling in polling support.

Odds are described as slightly favouring Valencia, while the credibility of polling is affected by a probe by the CNE (Consejo Nacional Electoral). The note also cites elevated institutional and fiscal stress, including tensions involving the central bank and limited fiscal space, which are linked to cautious market behaviour towards Colombian assets.

With the May 31st presidential election approaching, we see significant uncertainty priced into Colombian assets. Polls point toward a runoff, with the market-friendly unified right candidate having a slight edge, but the outcome is far from certain. This tension is creating clear opportunities and risks for derivative traders over the next six weeks.

The increased political risk has pushed implied volatility higher across the board, particularly in options on the USD/COP currency pair. We have seen the peso weaken by over 3% this quarter, trading near 4,100 as investors seek safety. Traders expecting further instability can buy call options on USD/COP, positioning for a sharper depreciation of the peso if the Historic Pact candidate gains momentum.

On the equity side, the COLCAP index has been a notable underperformer in Latin America, down nearly 5% year-to-date while Brazil’s Bovespa is positive. This reflects anxiety over potential fiscal and institutional stress, regardless of the winner. Buying put options on a Colombian stock market ETF can serve as an effective hedge against a negative election surprise.

Rates Credit And Volatility

We remember the run-up to the 2022 election, when from our perspective in 2025, we saw Colombia’s 5-year Credit Default Swaps (CDS) widen significantly as a measure of risk. A similar trend is emerging now, with spreads ticking up by 25 basis points since the start of the year. This indicates that bond traders are already pricing in a higher probability of distress.

The central bank’s difficult position, battling inflation that remains sticky above 5%, gives it little room to support the economy. This backdrop amplifies market sensitivity to political news, suggesting even small shifts in polling could trigger outsized moves. Therefore, simple directional bets are risky, and strategies that profit from price swings, like long straddles, might be more prudent.

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AUD/USD rebounded on Monday after opening with a gap lower, as hopes of a US-Iran deal improved market mood and reduced support for the US Dollar. AUD/USD traded near 0.7089 after an intraday low around 0.6990.

The US Dollar Index (DXY) was around 98.54 after earlier trading near 99.00. US President Donald Trump said on Monday that the United States had been contacted by “the right people” in Iran, after weekend talks ended without a breakthrough and after he ordered a naval blockade targeting Iranian ports.

Middle East Risk And Oil Impact

Traders are watching Middle East developments, including any easing of tensions and possible reopening of the Strait of Hormuz. Higher Oil prices are adding to inflation concerns and affecting central bank policy expectations.

In the US, March headline CPI rose 0.9% month-on-month, up from 0.3% in February, and increased to 3.3% year-on-year from 2.4%. This has supported expectations that the Federal Reserve will keep interest rates unchanged in coming months.

In Australia, inflation remains above the RBA’s 2%–3% target range, and the RBA has raised rates twice this year. Employment data due Thursday and China’s trade balance figures due Tuesday are also in focus.

We remember the sharp rebound in AUD/USD around this time in 2025, when hopes for a US-Iran deal boosted risk sentiment. That optimism proved short-lived, and the geopolitical landscape remains a source of volatility. The pair is now trading significantly lower, near 0.6550, reflecting a much different economic environment.

Fed Rba Divergence And Strategy

Last year, strong inflation prints reinforced expectations for the Federal Reserve to hold rates steady. Now, with the latest March 2026 inflation data unexpectedly rising to 3.5%, markets are pricing out any near-term rate cuts from the Fed. This renewed dollar strength suggests that selling rallies in AUD/USD could be a viable strategy.

The Reserve Bank of Australia’s hawkish stance from 2025, which saw multiple rate hikes, has successfully brought inflation down from its peaks. With the latest quarterly inflation figures tracking lower, the RBA now has little reason to raise rates further, creating a policy divergence against the Fed. This fundamental backdrop supports owning downside protection, such as buying AUD/USD put options.

Concerns over China’s economy, a key focus for us in 2025, have intensified. Recent trade data for March 2026 showed a surprise contraction in both exports and imports, signaling weaker domestic and global demand. This has pushed key commodity prices, like iron ore, below the critical $100 per tonne level, directly weighing on the Aussie dollar.

Given the diverging central bank outlooks and headwinds from China, the path of least resistance for AUD/USD appears to be lower. With implied volatility in the currency pair remaining relatively subdued, purchasing put options to position for a move towards 0.6400 seems prudent. This strategy offers a defined-risk way to capitalize on further downside in the coming weeks.

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Danish private consumption rose in March. Real spending excluding energy increased 1.2% month-on-month and 3.8% year-on-year, with Easter timing noted as a factor.

Goods spending improved across retail and groceries. Real retail spending rose 1.2% month-on-month, while real grocery spending rose 0.6% month-on-month and has trended upwards since October 2025.

Grocery Spending Rebound

Earlier in 2024, real grocery spending had been declining. The article links the later rebound to food prices no longer rising quickly.

Energy-related outlays rose, mainly at petrol stations. Nominal spending at petrol stations increased 12.4% month-on-month, due to higher petrol and diesel prices, but was only back at 2024 levels.

The article also points to changes in Denmark’s car stock. It reports that households have been shifting from fossil fuel cars to electric cars in recent years.

Service spending rose in March as well. Beauty and barber services and travel-related services increased, while restaurants, bars, tourist attractions, and cinemas grew at a slower pace.

Markets And Policy Implications

Higher energy prices in March did not reduce spending in other areas. Overall spending rose across categories.

The unexpected strength in March consumer spending suggests the Danish economy has more momentum than previously thought. This resilience, especially with real spending up 3.8% from last year, challenges the view that higher energy costs would halt growth. We should adjust for the possibility that the market has been overly pessimistic on Danish consumer health.

This data complicates the outlook for interest rates and may force Danmarks Nationalbank to maintain a hawkish stance for longer. Recent figures from Danmarks Statistik show core inflation ticked up slightly to 2.9% in March, and this strong demand could add further pressure. Derivative traders should consider that rate cut expectations, which were building throughout the first quarter, might be pushed further out into late 2026.

For equity markets, this points towards potential upside in consumer-focused stocks within the OMXC25 index. The recovery in grocery and service spending, a trend we’ve observed since late 2025, directly benefits retail and travel companies. We could look at call options on these sectors, as implied volatility may not yet reflect this newfound consumer strength.

The report notes higher gasoline prices have not crowded out other spending, partly due to the shift to electric vehicles. This creates an opportunity for pairs trading, such as going long a basket of Danish consumer discretionary stocks while shorting energy futures. This strategy bets on the continuation of strong consumer activity regardless of moderate energy price fluctuations.

In the currency market, this robust domestic picture supports a stronger Danish Krone. While the DKK is pegged to the Euro, strong fundamentals could push the EUR/DKK exchange rate toward the lower end of its narrow trading band. Traders could use FX options to position for a period of sustained Krone strength against the Euro.

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US President Donald Trump spoke at a press conference in the Oval Office and praised Vice-President JD Vance’s work on Iran, saying he “has done a very good job on Iran”. He said the US had been “called this morning by the right people on Iran”, and that they “want a deal”.

Trump said Iran did not agree to not having a nuclear weapon, and said the US would “get nuclear material back”. He also reiterated that the US blockade of the Strait of Hormuz has started.

Market Reaction And Immediate Signals

He said China’s President Xi wants the situation ended. Trump also said the US may stop by Cuba after it is finished with Iran.

Gold prices rose from around $4,730 to $4,741 before falling back to $4,734. The Dow Jones Industrial pared earlier losses and was flat at 47,926, while the US Dollar Index (DXY) fell 0.09% to 98.61.

Given the conflicting messages of a blockade and a potential deal, we should expect extreme volatility in the coming weeks. The CBOE Volatility Index (VIX), which jumped over 30% last week to near 28, is the most direct way to play this uncertainty. Traders should consider buying call options on the VIX to profit from the sharp price swings that are likely to follow.

The blockade of the Strait of Hormuz is the most critical factor for the energy markets, as nearly a fifth of the world’s daily oil supply passes through it. We should be buying long-dated call options on crude oil futures, like WTI and Brent, to position for a supply shock. A sustained blockade could easily push Brent crude well past the $150 per barrel mark we saw briefly in 2025.

We saw a similar situation back in 2019 when drone attacks on Saudi facilities temporarily knocked out 5% of global supply, causing oil to spike almost 20% in a single day. The current situation is far more severe, suggesting any escalation will have a much larger and more sustained impact on prices. This historical precedent means we should not underestimate how quickly the market can move.

Portfolio Positioning For Escalation Risk

Higher energy costs will act as a tax on the global economy, likely pushing major stock indices lower. The Dow’s flat reaction seems to be wishful thinking, focused on the possibility of a deal rather than the reality of a blockade. We should look at buying put options on the S&P 500 and the Dow Jones Industrial Average as a hedge against a market downturn.

The most direct losers from a blockade are global shipping and logistics companies, especially oil tanker operators. This presents a clear opportunity to buy puts on major maritime transport stocks. Their operating costs will soar due to insurance premiums and the need for longer, alternative routes, directly hitting their profitability.

Gold remains the primary safe-haven asset in this environment, and its initial jump shows its sensitivity to this crisis. Central banks have been steady buyers, absorbing over 800 tonnes in 2025 alone, which provides a strong floor for the price. We should add to positions in gold futures or call options on gold ETFs to protect against further geopolitical deterioration.

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The DJIA fell about 50 points to near 47,900 after a sharper drop at the open. The S&P 500 rose 0.2% above 6,800 and the Nasdaq gained 0.6% above 23,000, after Dow futures fell more than 500 points overnight following a US blockade announcement for the Strait of Hormuz.

WTI oil rose more than 5% to above $101 per barrel, while Brent jumped as much as 9% to about $102. CENTCOM said the action would not block ships travelling to non-Iranian ports, after talks in Islamabad ended without a deal and mediators from Pakistan, Egypt, and Turkey planned further discussions.

Bank Earnings And Market Reaction

Goldman Sachs fell 2.5% despite EPS of $17.55 versus $16.49 and revenue of $17.23bn versus $16.97bn. Equities trading revenue rose 27% year on year to $5.33bn, while FICC revenue fell 10% to $4.01bn, about $900m below StreetAccount estimates.

Oracle rose 8%, Palantir gained more than 3%, and ServiceNow and Workday rose more than 5%. Existing home sales fell 3.6% to 3.98m, the lowest since June 2025, while the median price rose 1.4% to about $409k.

The 10-year yield rose 3 basis points to 4.34% and the 30-year rose 2 to 4.93%. March PPI is due Tuesday, seen at 4.6% year on year and 1.2% month on month, with core PPI at 4.2%.

We remember how the Strait of Hormuz blockade in April of last year sent oil futures soaring over 5% in a single session. That event showed how quickly geopolitical flare-ups can inject volatility into the market, even if equities manage to recover intraday. Considering the renewed tensions in the Middle East, we are watching for similar sharp moves.

Hedging Ideas For Renewed Volatility

Given this backdrop, we should consider hedging against a sudden oil spike by looking at call options on energy ETFs like the XLE. Last week, the CBOE Volatility Index, or VIX, already jumped over 30% to nearly 19, showing that fear is returning to the market. Buying VIX calls or puts on the S&P 500 can provide a direct hedge against a broader market downturn.

The surge in oil back then reignited inflation fears, and we are seeing a parallel today. The recent Consumer Price Index report showed core inflation remains sticky at 3.8%, which has already pushed traders to price out expectations for near-term rate cuts from the Federal Reserve. Positions that bet on bond yields remaining elevated, such as shorting Treasury futures, could be effective.

Last year’s turmoil triggered a clear rotation out of financials and into enterprise software stocks driven by the artificial intelligence narrative. We see a similar flight to quality in technology now, suggesting a pairs trade could be beneficial. This might involve going long a basket of software leaders while simultaneously shorting a financial sector ETF to capitalize on this divergence.

We also saw last year how rising rates choked off the housing market, with existing home sales hitting a nine-month low in March 2025. With 30-year mortgage rates once again climbing back above 7% according to Freddie Mac, rate-sensitive sectors remain vulnerable. Exploring put options on homebuilder ETFs could be a prudent way to position for continued softness in this area.

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Silver (XAG/USD) traded near $74.10 on Monday, down 2.23%, after falling to an intraday low of about $72.61. It tried to steady, but stayed under pressure as the US Dollar strengthened amid rising geopolitical tensions.

Sentiment weakened after US–Iran peace talks failed over the weekend, with efforts for a lasting Middle East ceasefire not succeeding. The US announced military measures to block maritime traffic linked to Iranian ports, focusing on the Strait of Hormuz, a major route for global energy flows.

Oil Prices And Inflation Expectations

Concerns about energy supply lifted Oil prices, with West Texas Intermediate trading around $97 per barrel. Higher Oil prices raised inflation concerns across markets.

With inflation risks rising, markets shifted expectations for Federal Reserve policy towards rates staying higher for longer, or possibly rising further. Higher rates reduce demand for non-yielding assets such as Silver by increasing the cost of holding them.

The early-week US data calendar is light, with attention on Tuesday’s US Producer Price Index (PPI) release. PPI data may add information on inflation trends and the path of Fed policy.

The recent failure of US-Iran negotiations is creating clear headwinds for silver, pushing it down as the US Dollar strengthens. The immediate reaction in the market suggests that short-term bearish strategies, such as buying put options or shorting futures contracts, could be favorable. This pressure is likely to continue as long as geopolitical tensions in the Middle East escalate.

Fed Policy And Silver Positioning

Spiking oil prices, now around $97 per barrel, are fueling inflation concerns and increasing the likelihood that the Federal Reserve will keep interest rates higher for longer. After last month’s Consumer Price Index (CPI) showed inflation remains persistent at a 3.5% annual rate, the market is now pricing in fewer rate cuts for this year. This environment raises the opportunity cost of holding non-yielding assets like silver, making it less attractive.

We saw a similar pattern during the 2022-2023 period when energy price shocks prompted aggressive rate hikes from central banks. Back then, silver’s role as a safe haven was overshadowed by the appeal of higher yields, causing its price to lag. History suggests that when a hawkish Fed is battling inflation, it often wins the tug-of-war against geopolitical uncertainty for silver traders.

Traders should pay close attention to the Producer Price Index (PPI) report coming out this Tuesday. A high PPI reading would confirm that inflationary pressures are still building, likely strengthening the dollar further and adding more downward pressure on silver. This could be a key trigger for initiating or adding to bearish positions.

While the monetary outlook is challenging, we must remember that industrial demand provides a strong underlying support for silver. The global push for solar energy, with solar installations growing by over 30% in 2025, continues to absorb a significant amount of the metal’s supply. This strong physical demand could create a floor for prices if the current diplomatic tensions begin to cool.

The gold-to-silver ratio has widened to over 90, up from an average of 84 last year, signaling that silver is significantly underperforming gold. This suggests that while gold is benefiting from a safe-haven bid, silver is being weighed down more by industrial and monetary factors. This divergence could be exploited through pairs trading, such as going long gold futures and short silver futures.

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Gold (XAU/USD) recovered on Monday after a gap-down open, trading near $4,717 after an intraday low around $4,632. Gains were limited as risk-off conditions persisted amid rising tensions between the United States and Iran.

Talks in Islamabad ended without a breakthrough after optimism linked to a two-week ceasefire faded. US President Donald Trump ordered a naval blockade of the Strait of Hormuz, and CENTCOM said it will cover all vessels entering or leaving Iranian ports across the Arabian Gulf and Gulf of Oman from Monday at 10:00 ET (14:00 GMT).

Geopolitical Tensions And Energy Shock

Iran’s Islamic Revolutionary Guard Corps said military vessels nearing the Strait of Hormuz would be treated as a ceasefire breach and could face a response. Crude prices rose, with WTI around $96, up about 6.5% at the time of writing.

Higher oil prices increased inflation concerns and supported expectations of higher-for-longer US rates, supporting the USD and Treasury yields. March headline CPI rose 0.9% month-on-month from 0.3% in February, and 3.3% year-on-year from 2.4%.

Technically, gold is above the 100-day SMA at $4,687.17 and the 200-day SMA near $4,185.69, but below the 50-day SMA at $4,899.38. RSI (14) is near 47 and ADX is around 27; resistance sits at $5,000–$5,200, while support is $4,600–$4,500.

We are seeing a familiar pattern of risk developing in the markets, which brings back memories of the US-Iran escalation in 2025. The naval blockade of the Strait of Hormuz at that time created extreme volatility, a lesson that is now informing our current strategies. With gold currently trading around $4,450, traders are watching for any signs of renewed conflict that could trigger a similar safe-haven rally.

Options Positioning And Volatility Focus

During the 2025 standoff, we saw WTI crude oil spike to $96 a barrel, directly fueling inflation concerns. Today, with WTI back above $85 due to ongoing OPEC+ supply cuts and renewed Mideast tensions, we are seeing a similar effect on prices. The latest US CPI data for March 2026 confirmed this, coming in hot at 3.6% year-over-year, which has dampened expectations for Fed interest rate cuts.

This creates the same difficult environment for gold that we navigated in 2025. While geopolitical risk should support gold as a safe-haven asset, the resulting inflation is pushing US Treasury yields higher as the market reprices Fed expectations. The 10-year Treasury yield has recently climbed back to 4.5%, increasing the opportunity cost of holding non-yielding gold and capping its upside potential.

Given the high level of uncertainty, we believe derivative traders should focus on volatility. Implied volatility on gold options is likely to rise in the coming weeks, making long volatility strategies like straddles or strangles attractive. This allows a trader to profit from a large price move in either direction, without having to bet on whether the geopolitical fear or the high-rate reality will win out.

For those with a more directional bias, we see an opportunity in using options to define risk. Buying call spreads targeting the old resistance zone of $4,800 could be a capital-efficient way to bet on an escalation, while purchasing puts with strike prices below the key $4,200 level, which corresponds to the 200-day moving average from last year, offers a hedge against a renewed sell-off if tensions ease and the focus returns solely to interest rates.

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