Gold traded near $4,985 in early Asian dealings on Thursday, staying in positive territory as demand for safe-haven assets returned. Markets are watching US Initial Jobless Claims, Pending Home Sales and remarks from Federal Reserve officials later in the day.
US Vice President JD Vance said Iran had not acknowledged key US demands in talks, and Washington agreed to give Tehran two weeks to narrow differences, according to CNBC. US President Donald Trump said force remains an option if diplomacy fails to stop Iran’s nuclear programme.
Holiday Liquidity And Gold Trading
Liquidity was low because of holidays in major regions. BMO Capital Markets said a softer period for gold can occur during holidays, which can allow bargain buying.
A firmer US Dollar may limit gains in dollar-priced gold. Minutes from the Fed’s January meeting showed several policymakers said rates may need to rise if inflation stays high, leading traders to reduce expectations for a cut this year, though futures still imply a reduction by June.
Central banks added 1,136 tonnes of gold worth about $70 billion to reserves in 2022, the highest annual purchase on record, according to the World Gold Council. Gold often moves inversely to the US Dollar and US Treasuries, and tends to benefit when interest rates fall.
We are seeing gold hold strong near the $5,000 level, primarily because of the rising tensions with Iran. This safe-haven demand is the main driver right now, creating a solid floor under the price. Any escalation in rhetoric from the White House in the next two weeks will likely push it higher.
Key Forces Driving The Next Move
This price strength isn’t new; it’s built on a multi-year trend of central bank buying that we saw accelerate back in 2022 and 2023. Looking back from our vantage point in 2026, official data confirmed that buying from emerging markets continued at a record pace through 2024 and 2025. This persistent demand has provided a fundamental reason for gold more than doubling in price since those years.
However, we must watch the US Dollar and the Federal Reserve very closely. The January FOMC minutes revealed a hawkish tilt, with several members open to raising rates again if the inflation that plagued us through 2025 proves too stubborn. A surprise move to hold rates higher for longer, or even hike, would almost certainly put a cap on gold’s rally.
The market is currently in a state of conflict, with Fed funds futures still suggesting a potential rate cut by June while the Fed itself is talking tough. This divergence between market expectation and central bank signaling creates an opportunity for volatility. Upcoming jobless claims and housing data will be watched intently for any sign that could tip the Fed’s hand one way or the other.
This environment is ideal for using options to express a view while managing risk. Given the high price, outright long positions are expensive and exposed to a sharp reversal if the geopolitical situation calms down. We should therefore consider strategies that can profit from a sharp move in either direction.
For traders anticipating that tensions will force gold higher, bull call spreads offer a defined-risk way to participate in further upside. Conversely, if we believe the Fed’s hawkish stance will prevail and strengthen the dollar, buying put spreads could be a cost-effective hedge. The key is to be positioned for a decisive break from this current stalemate.
