Gold traded near $5,195 in early Asian hours on Friday, moving towards $5,200 as demand rose amid uncertainty over US tariffs. Markets are waiting for the US January Producer Price Index (PPI) release later on Friday.
Donald Trump said he would impose a blanket 15% tariff on imports after a Supreme Court ruling ended his earlier reciprocal tariff regime. US Trade Representative Jamieson Greer said levies could be raised to 15% or higher for many countries in the coming days.
Iran Talks Temper Gold Rally
Easing US-Iran tensions may limit further gains in gold prices. Oman’s Foreign Minister Badr Albusaidi said the US and Iran will continue nuclear talks next week after making progress in Switzerland, with technical-level negotiations set to resume in Vienna.
Economists expect US PPI to rise 0.3% month-on-month in January, down from 0.5% in December. Annual PPI is forecast at 2.6% in January, compared with 3.0% previously.
A higher-than-expected PPI reading could support expectations that US interest rates stay on hold, which can weigh on non-interest-bearing gold. Central banks added 1,136 tonnes of gold worth about $70 billion to reserves in 2022, according to the World Gold Council.
We recall the uncertainty in early 2025 when gold approached $5,200 based on threats of a 15% blanket tariff. Much of that trade friction was implemented through the second half of 2025, which has helped fuel stubborn inflation. As a result, the most recent Consumer Price Index (CPI) report for January 2026 showed headline inflation at 3.9%, still nearly double the Federal Reserve’s target.
Rates Volatility And Trading Levels
The “hotter-than-expected” price data throughout 2025 prevented any significant easing of monetary policy, just as we had considered. Consequently, the Federal Reserve has maintained a restrictive stance, with the effective federal funds rate holding firm above 5.5%. This high-rate environment continues to create headwinds for a non-yielding asset like gold, limiting its potential for a major rally.
While the US-Iran nuclear talks did result in a limited agreement in mid-2025, other geopolitical risks have since come into focus. This persistent global uncertainty provides a solid floor of safe-haven demand for gold, which explains why it has not broken down despite high interest rates. This creates a tense balance for the metal, keeping it range-bound between its 2025 highs and strong technical support.
For the coming weeks, we believe trading volatility is more effective than taking a strong directional view. Using options to structure strangles around key economic events, such as the upcoming Fed meeting in March, could capture a potential price spike in either direction. Implied volatility on gold futures has been climbing steadily, indicating the market is pricing in a significant move soon.
We are watching key levels to structure derivative trades, with call options looking attractive on a sustained break above the $5,300 resistance. Conversely, buying puts offers a cost-effective hedge for portfolios in case the pressure from high interest rates finally pushes the price below the critical $5,000 psychological support. The ratio of open interest between calls and puts suggests the market remains sharply divided on gold’s next major move.
