Gold fell for a second session, trading near $4,930 per troy ounce in Asian hours on Tuesday and about 0.7% lower. Volumes were thin due to market holidays in China, Hong Kong, and parts of Asia.
Downside may be capped after softer US January CPI data lifted expectations for two 25-basis-point Federal Reserve rate cuts later this year. The CME FedWatch tool shows a 52% chance of a 25-basis-point cut in June and 44% in July.
Key Data Events This Week
Markets are watching Fed meeting minutes, Q4 GDP data, and the Fed’s core PCE price index later this week for policy signals. January NFP growth was the strongest in over a year and the unemployment rate edged lower, while the PCE price index remains near 3% versus the 2% target, with uneven disinflation since mid-2025.
Gold demand may rise on US–Iran tensions ahead of a second round of talks. Iran held maritime drills in the Strait of Hormuz after the US deployed a second aircraft carrier, with nuclear negotiations set to resume Tuesday.
US-led discussions between Russia and Ukraine are also due to begin Tuesday. Markets remain cautious about near-term progress.
We are seeing gold pull back to the $4,930 level, but the selling is light with key markets in Asia closed. The market is caught between signs of a very strong US labor market and softening inflation data that points to potential rate cuts. This creates a difficult environment for taking a strong directional view in the immediate term.
Focus On The Fed Path
The Federal Reserve’s path remains the central question, with inflation proving stubborn since the middle of 2025 despite the major rate hikes we saw end back in 2023. Recent US government data confirms the Personal Consumption Expenditures (PCE) index is holding near 3%, a full percentage point above the Fed’s target. This stubbornness makes the market’s bet on a June rate cut, currently priced with a 52% probability, seem quite aggressive.
Geopolitical risks are providing a solid floor under the gold price, preventing a deeper sell-off for now. The renewed tensions in the Strait of Hormuz are particularly noteworthy, as any disruption in a waterway that handles over 20% of global daily oil supply could trigger a significant flight to safety. Ongoing diplomatic talks involving Russia and Ukraine are viewed with skepticism, adding another layer of uncertainty that supports holding gold.
Given these conflicting signals, we should consider strategies that profit from price movement in either direction, rather than betting on a specific outcome. Options strategies like long straddles or strangles could be effective, as they are designed to capitalize on an increase in volatility. The upcoming economic data releases this week are likely to provide the exact kind of price swings these positions are built for.
In the coming weeks, our focus must be on the Fed Meeting Minutes and the core PCE price index data. These releases will give the clearest signal on whether the Fed is leaning towards the market’s rate cut expectations or siding with the strong economic data. Derivative traders should be prepared for sharp moves around these key events and position accordingly to benefit from the resulting volatility.
