Gold rose to a three-week high on Monday as uncertainty over US trade policy and US-Iran tensions lifted demand for safe-haven assets. XAU/USD traded near $5,208, up almost 2.20% on the day.
On Friday, the US Supreme Court ruled against President Donald Trump’s use of the IEEPA to impose reciprocal tariffs. The administration then used Section 122 of the Trade Act of 1974 to set a temporary 10% flat tariff on imports from all countries, raised to 15% on Saturday.
Tariffs Timeline And Middle East Risks
The tariff is due to start on 24 February and can stay in place for 150 days without Congressional approval. Markets also tracked reports of a large US military build-up in the Middle East, with US-Iran nuclear talks set to resume in Geneva on Thursday.
This week’s US data calendar is light, with ADP and Conference Board Consumer Confidence on Tuesday, the State of the Union on Wednesday, Jobless Claims on Thursday, and January PPI on Friday. Traders still price in 50 bps of rate cuts by year-end.
Technically, gold broke above $5,100, with RSI near 69 and MACD still positive but easing. A move above $5,200 may target $5,400–$5,500, while support levels include $4,964, $4,850, and $4,650.
Central banks added 1,136 tonnes of gold worth about $70 billion in 2022. This was the largest annual purchase since records began.
Looking Back At February 2025
Looking back at the events of February 2025, we saw gold spike due to a perfect storm of trade and geopolitical fears. The surprise 15% flat tariff announced by the US administration triggered a significant flight to safety. This move, combined with the military buildup related to Iran, created the exact kind of uncertainty that fuels a gold rally.
The tariffs, which lasted the full 150 days into July 2025, did indeed disrupt global supply chains and contributed to a slowdown in US GDP growth in the second and third quarters of that year. We recall that import-dependent sectors saw producer prices rise, with the PPI increasing by an average of 0.8% month-over-month during that period. The eventual removal of the tariffs provided relief but left markets wary of sudden policy shifts.
That economic softness prompted the Federal Reserve to act, and as many had predicted, we saw two 25-basis-point rate cuts in the second half of 2025. This easing cycle provided a strong tailwind for gold throughout the year, as lower interest rates reduce the opportunity cost of holding the non-yielding metal. This fundamental support from central banks remains a key factor in our current analysis.
Today, in February 2026, the situation feels noticeably calmer, but this may present an opportunity. Geopolitical risks are simmering rather than boiling over, and trade policy appears more stable for now. Consequently, implied volatility on gold options is much lower, with the CBOE Gold Volatility Index (GVZ) currently trading around 16, compared to the highs above 22 we saw during the tariff scare last year.
This lower volatility environment makes buying options relatively inexpensive compared to this time in 2025. For traders who believe that underlying risks from global debt or renewed geopolitical friction are being underestimated, long-dated call options offer a defined-risk way to position for a potential price surge. This strategy allows for significant upside if another unexpected event occurs, similar to the tariff announcement last year.
We also note that the fundamental demand picture remains robust, a lesson reinforced from the past few years. Central banks continued their strong purchasing in 2025, adding another 1,037 tonnes to global reserves, showing a persistent desire to diversify away from the dollar. This steady buying provides a floor for the market, making strategies like selling out-of-the-money puts to collect premium attractive for those with a moderately bullish to neutral outlook.
