Gold rose slightly on Wednesday after losses the day before. XAU/USD traded near $5,192 after falling to $5,121, with a steady US Dollar and firmer equities limiting gains.
Trade concerns returned after Donald Trump announced a 10% tariff on imports from all countries. The move follows a US Supreme Court ruling against using the International Emergency Economic Powers Act (IEEPA).
Geopolitical And Trade Uncertainty
Markets also watched US-Iran nuclear talks due in Geneva on Thursday. Trump said he prefers diplomacy, while Iran’s Deputy Foreign Minister Abbas Araghchi said Tehran is ready to take steps towards an agreement.
Expectations for near-term Federal Reserve rate cuts have eased as officials point to ongoing inflation pressure. Chicago Fed President Austan Goolsbee cited the 2% inflation target, and Boston Fed President Susan Collins said rates may stay unchanged “for some time”.
On the 4-hour chart, gold is below $5,250 and forms a rising wedge pattern. RSI (14) fell from above 70 to the high-50s, and MACD (12, 26, 9) moved below its signal with a negative histogram.
A break above $5,250 could target $5,500. A drop below $5,100 may expose the 100-period SMA near $5,012, then $4,850 and $4,650.
Strategy And Risk Management
Gold is currently stuck in a tight range as we balance major geopolitical risks against a firm Federal Reserve. The new 10% tariff on all U.S. imports and the upcoming Iran nuclear talks in Geneva are creating significant demand for safe havens like gold. However, the strong U.S. dollar is acting as a major headwind, keeping a lid on any potential rally.
We’ve seen this movie before with trade policy, recalling how gold rallied over 20% in 2019 during the peak of the U.S.-China trade conflict. Given that U.S. GDP growth slowed to just 1.1% in the fourth quarter of 2025, these new tariffs could easily tip the scales toward a recession, making gold very attractive. The uncertainty surrounding the Iran talks only adds another layer of support for the metal.
On the other hand, the Federal Reserve is not helping the bull case, as policymakers are clearly concerned about inflation. With the last Consumer Price Index (CPI) report in January showing core inflation remaining stubbornly high at 3.8%, Fed officials are pushing back against market hopes for rate cuts. We’ve seen fed funds futures shift dramatically, with the odds of a March rate cut dropping from over 70% last month to below 30% today.
This fundamental conflict, combined with technical indicators showing weakening momentum, suggests that picking a direction is a dangerous game right now. Instead of taking a simple long or short position, we should consider options strategies that profit from a big price swing in either direction. A long straddle, which involves buying both a call and a put option with a strike price near the current $5,200 level, is well-suited for this environment.
This strategy allows us to profit if gold breaks out forcefully above the $5,250 resistance on bad geopolitical news, or if it breaks down below the $5,100 support level on hawkish Fed commentary. The premium paid for the options is our maximum risk, which provides a defined-risk way to trade the expected volatility. This is a much safer approach than holding a futures contract that could get whipsawed by conflicting headlines.
