Gold rose above $5,260 on Friday, with XAU/USD at $5,261 after gains of over 1.20%. It reached a one-month high and extended gains for a seventh straight month, holding above $5,200.
US–Iran talks ended on Thursday without progress. The US Embassy in Jerusalem allowed non-emergency staff and families to leave, while CNN reported no intelligence that Iran is planning an intercontinental ballistic missile capable of reaching the US.
Us Inflation And Fed Expectations
US Producer Price Index inflation for January was 2.9% year on year, below 3% previously but above the 2.6% forecast. Core PPI rose 3.6% year on year, compared with 3.3% previously and forecasts of 3%.
Markets were pricing nearly 58 basis points of easing, with the first rate cut expected to be delayed until the Fed’s 29 July meeting. Traders implied 29 basis points of easing.
Next week’s US data includes ISM Manufacturing and Services PMI, ADP Employment Change for February, Initial Jobless Claims, Retail Sales, and February Nonfarm Payrolls. Technical levels cited include resistance at $5,300, then $5,400, $5,450, $5,500, and a record high near $5,600.
Support levels listed were $5,093, the 20-day SMA at $5,019, and $5,000. Central banks added 1,136 tonnes of gold worth around $70 billion in 2022, the highest annual purchase on record.
Options Strategy And Risk Management
With gold breaking past $5,260, we see the current momentum continuing, fueled by geopolitical fears and stubbornly high inflation. The failure of US-Iran talks adds a layer of uncertainty that strongly supports safe-haven assets. Derivative markets are reflecting this, as open interest in call options has surged by nearly 15% in the last five trading days.
We should consider buying call options with strike prices at $5,400 and $5,500 to capitalize on this powerful uptrend. This strategy is reminiscent of the profitable moves we saw in late 2025, when similar geopolitical fears drove the metal decisively higher. March and April expirations offer a good balance to capture the move towards the January high of $5,450 without overpaying for time.
Given the high volatility, buying protective put options below the $5,100 level is a prudent way to hedge any long exposure. Implied volatility in gold options is now at a three-month high, making outright positions expensive, so using bull call spreads could be a more capital-efficient strategy. This approach helps manage costs while positioning for a rise.
We must also watch next week’s US jobs and retail sales data very closely, as they will influence the Federal Reserve’s rate-cut timeline. A strong Nonfarm Payrolls report could create a short-term pullback, offering a better entry point for new long positions. We saw a similar pattern after a surprise jobs number in the third quarter of 2025, which caused a temporary dip before the uptrend strongly resumed.
