Gold rebounded on Thursday after failing to stay below $4,600, helped by softer US Dollar and Treasury yields. XAU/USD traded near $4,660 after dropping to $4,554 in the European session.
Risk mood improved after reports that Iran is working with Oman on traffic rules for the Strait of Hormuz, including a joint protocol for safe passage. Earlier, gold fell as much as 4% after President Donald Trump spoke of continued US military action over the next two to three weeks.
Geopolitical Risk And Energy Prices
Ongoing conflict risk keeps concerns about disruptions through the Strait of Hormuz and supports higher oil prices. Higher energy costs also add to inflation and growth risks.
Markets now expect the Federal Reserve to keep rates unchanged at 3.50%–3.75% this year, versus earlier expectations of at least two cuts, according to CME FedWatch. Fed officials said policy should stay in place for some time, with inflation expectations a focus.
On the 4-hour chart, gold failed to hold above the 100-period SMA near $4,711 and shows a bearish flag pattern. Support is near $4,600 then the 50-period SMA around $4,534, with downside risk toward $4,200–$4,000.
Resistance is $4,711, then $4,800 and near $5,000. Central banks added 1,136 tonnes of gold worth about $70 billion in 2022, the highest yearly purchase on record.
Options Market Setups And Volatility
We are seeing gold in a tug-of-war, which presents clear opportunities for options traders. The inability for sellers to hold gold below the $4,600 mark shows there’s a strong bid on geopolitical fears. However, the Federal Reserve’s commitment to keeping interest rates high creates a significant headwind against any major rally.
The Fed’s hawkish stance is being reinforced by the latest economic data. The March 2026 Consumer Price Index (CPI) report came in hotter than expected at 3.8% year-over-year, which makes the market believe the Fed will keep its benchmark rate firm at 3.75% for longer. This high opportunity cost for holding a non-yielding asset like gold will likely cap any upside momentum in the coming weeks.
On the other hand, the situation in the Middle East remains extremely tense, which is why gold finds buyers on every dip. Recent satellite imagery confirms increased naval patrols near the Strait of Hormuz, making President Trump’s aggressive rhetoric feel more tangible. A sudden escalation there would almost certainly push gold through near-term resistance, regardless of interest rate expectations.
This uncertainty is reflected in the derivatives market itself, where implied volatility is rising. The CBOE Gold Volatility Index (GVZ) has climbed to a six-month high, suggesting traders are pricing in a sharp move in either direction. This environment makes strategies that profit from volatility, such as long straddles or strangles, particularly interesting.
From a directional standpoint, the technical levels are very clear for setting up trades. We would look to buy put options to target a move toward $4,200 if gold breaks decisively below the 50-period moving average near $4,534. Conversely, a sustained break above the $4,711 resistance level on news of conflict escalation could be a signal to initiate long positions using call options.
We must remember the lessons from the post-pandemic inflation spike of 2022, which showed how energy price shocks can force central banks to remain aggressive. At the same time, we also saw in 2022 and 2023 that central banks became the largest buyers of gold on record. This long-term official demand provides a fundamental floor that could prevent a complete price collapse, even if the Fed remains hawkish.
