Gold (XAU\/USD) held a positive bias for a third day on Friday, trading above $5,000, but showed limited follow-through. Markets awaited the US Advance Q4 GDP report and the Personal Consumption Expenditures (PCE) Price Index to guide expectations for the Federal Reserve\u2019s rate path and the US Dollar.<\/p>\n
Geopolitical tension also supported demand for gold after Donald Trump set a 10 to 15 day deadline for Iran to reach a nuclear deal and warned of consequences. Iran told UN Secretary-General Antonio Guterres it does not seek war, but said regional bases and assets of a hostile force would be targets if attacked.<\/p>\n
Federal Reserve meeting minutes indicated no urgency to cut rates, and officials discussed raising rates if inflation does not cool. A resilient US labour market and hawkish Fed remarks pushed the US Dollar to its highest level since 23 January, limiting gold\u2019s upside.<\/p>\n
Technically, gold rebounded from the 100-hour SMA at $4,965.41, but recent trading remained range-bound. MACD stayed below the signal line and zero with a contracting negative histogram, while RSI was 53.<\/p>\n
Core PCE, the Fed\u2019s preferred inflation gauge, tracks year-on-year price changes excluding food and energy, with higher readings typically supporting the US Dollar. The Bureau of Economic Analysis releases PCE alongside Personal Spending and Personal Income after the GDP report.<\/p>\n
Looking back at the situation in early 2025, we remember the market’s hesitancy around the $5,000 level for gold, driven by uncertainty over the Fed’s path and geopolitical flare-ups. Today, on February 20, 2026, that uncertainty has largely been replaced by a much clearer, more bullish outlook for precious metals. The wait-and-see approach from last year is no longer the prudent strategy.<\/p>\n
The primary driver for this shift is inflation data, which was a major concern this time last year. The most recent Core PCE reading for January 2026 came in at just 2.1% year-over-year, a significant drop from the 3.5% figures we were seeing in early 2025 and is now squarely within the Federal Reserve’s target range. This has fundamentally altered the landscape for interest rate expectations.<\/p>\n
Consequently, the hawkish Fed commentary we saw in the January 2025 FOMC minutes, which even mentioned the possibility of rate hikes, has completely reversed. The latest minutes from this year show a committee actively planning for at least two rate cuts before the end of 2026. This pivot makes holding a non-yielding asset like gold far more attractive compared to a year ago.<\/p>\n
We should also note that the acute geopolitical risks that supported gold in 2025 have since calmed. The specific threats between the US and Iran de-escalated later that year, removing some of the safe-haven premium that was priced into the market. While this took away one pillar of support, it has been replaced by the much stronger fundamental driver of expected monetary easing.<\/p>\n
Given this backdrop, derivative traders should consider positioning for upward price movement in gold, a stark contrast to the cautious stance of last year. Buying call options with expiry dates set after the next few FOMC meetings could be a direct way to capitalize on the anticipated rate cuts. This strategy allows traders to benefit from a potential rise in gold prices driven by a more accommodative Fed.<\/p>\n
Implied volatility in gold options is likely to increase around key data releases and Fed announcements, which can make buying options more expensive. Therefore, constructing bull call spreads may be a sensible approach to lower the initial cost and define risk. This allows for participation in the upside while managing the premium paid in an environment where the direction seems clear but the timing is still uncertain.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Gold stays above $5,000 as geopolitical risks and key US data shape Fed-rate outlook, capping gains.<\/p>\n","protected":false},"author":62,"featured_media":16977,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42412","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42412","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=42412"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/42412\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16977"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=42412"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=42412"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=42412"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}