Gold rose for a fourth day on Monday and moved back above $5,200 late in North American trading, with XAU/USD up nearly 2%. Prices reached a four-week high of $5,219 as the US Dollar eased.
The US Supreme Court ruled against duties imposed under the International Emergency Economic Powers Act (IEEPA). After the decision, Donald Trump announced 10% global tariffs, then raised them to 15% under Section 122 tariffs, which expire 150 days after enactment.
Geopolitical Risk And Safe Haven Flows
Middle East tensions also supported demand, after reports that Washington is considering a targeted strike on Iran followed by a larger attack aimed at removing the Supreme Leader by force. Talks are set to resume in Geneva on Thursday, and the US embassy in Beirut ordered non-emergency personnel and family members to leave on Monday.
US data showed growth of 1.4% quarter-on-quarter in Q4 2025, while Core PCE inflation rose 3% in December. Swaps markets price 55 basis points of easing.
The Dollar index fell 0.15% to 97.64, and the 10-year US yield dropped six basis points to 4.025%. Key levels cited include $5,250, $5,451, $5,500 and $5,600, with support at $5,025 and $4,702. Central banks added 1,136 tonnes of gold worth about $70 billion in 2022.
The recent surge in gold to over $5,200 is being driven by significant geopolitical and trade uncertainty. The new global tariffs and escalating tensions with Iran are creating a classic safe-haven rush. This environment suggests that positioning for continued upside and volatility is the most logical approach in the coming weeks.
Options Positioning And Market Signals
This isn’t just short-term speculation; we’re seeing sustained institutional interest in gold. Central banks have continued the aggressive buying pattern we observed in previous years, where they collectively added over 1,000 tonnes to their reserves annually. This underlying demand from major global players provides a strong floor for the price.
The weak US economic data from late 2025, coupled with the latest ISM Manufacturing PMI reading still showing contraction at 47.1, puts the Federal Reserve in a difficult position. Despite the 3% inflation we saw in December, the Fed will be under immense pressure to cut rates to support a slowing economy. A rate cut would likely weaken the dollar further and push gold higher.
For derivative traders, this points toward buying call options to capitalize on further gains while defining risk. Given the high tension ahead of the Geneva talks and President Trump’s State of the Union address, volatility is expected to remain elevated. Buying call spreads could be a cost-effective way to position for a move toward the $5,400 to $5,500 levels.
We are already seeing significant activity in the options market that supports this bullish view. Open interest for April contracts with strike prices of $5,400 and $5,500 has increased by over 30% in the last week. This indicates that a large portion of the market is actively positioning for a test of the all-time highs.
Historically, we have seen this combination of high inflation, geopolitical conflict, and a weakening dollar before, particularly in the late 1970s. That period saw gold prices multiply several times over in a short span. The current setup is rhyming with that history, suggesting this rally could have much further to run.
It is wise to remain hedged against any sudden de-escalation of conflicts. A successful outcome in the Geneva talks could cause a sharp, albeit likely temporary, drop in gold prices. Traders holding long positions should consider using the $5,100 level as a key support marker and could purchase put options for protection.
