Gold has rebounded after a steep drop, gaining over 5% as buyers returned to the market. Despite a stronger US Dollar and improved US-Iran relations potentially limiting gains, Gold remains supported above the rising 20-day SMA with widening Bollinger Bands.
Gold is trading near $4,980, recovering from a dip to $4,402, following a largely technical sell-off driven by position unwinding and margin liquidations. Despite recent volatility, Silver also jumped nearly 10%.
Us Iran Relations Developments
The US and Iran have shown signs of easing tensions, planning to send envoys for nuclear talks. Concurrently, a trade deal between the US and India sees US tariffs on Indian goods reduced significantly.
US economic data releases are delayed due to a government shutdown, but the US Dollar Index is nearing highs thanks to upbeat manufacturing data and a new Fed Chair nominee. Markets see Kevin Warsh’s nomination as easing concerns about aggressive rate cuts.
From a technical perspective, Gold’s uptrend holds firm, supported above $4,800 with the RSI recovering and elevated ADX indicating a strong, though slightly easing, positive trend. Resistance is seen at $5,000, with support near $4,500 should prices fall.
The sharp rebound from the $4,400 level shows there is still strong buying interest, but we must be cautious in the coming weeks. The surge in volatility, with the Average True Range hitting 212, means options premiums are expensive. This high cost must be factored into any new positions aiming to capture short-term moves.
Central Banks Continue Support
The broader uptrend remains our primary guide, supported by massive central bank purchasing that continued through 2025. We saw central banks add over 1,000 tonnes to reserves last year, creating a solid long-term floor under the price. Selling out-of-the-money put spreads with a strike price below the recent low of $4,402 could be a way to collect this high premium while betting the major correction is over.
On the other hand, the US Dollar’s recovery to 97.40 cannot be ignored, especially with a perceived hawk like Kevin Warsh nominated for Fed Chair. This comes as the latest CPI data for January 2026 showed core inflation remaining sticky above 3%, reinforcing the “higher for longer” interest rate narrative we heard throughout 2025. A stronger dollar makes gold more expensive for foreign buyers and acts as a headwind.
This environment could be ideal for traders who believe the rally will stall before making new records. Considering the powerful resistance near the old highs of $5,600, establishing bear call spreads above the $5,400 level is a strategy that defines our risk. This approach profits if gold trades sideways or drifts lower in the coming weeks.
We should also note that despite the price recovery, gold-backed ETFs saw net outflows of over $2 billion in January 2026, suggesting institutional money is not yet fully convinced. With the jobs report delayed and US-Iran talks pending, the market is waiting for a fresh catalyst. We must remain nimble as the strong technical trend and the challenging macroeconomic backdrop are currently sending conflicting signals.
