Gold rose above $4,700 on Friday and was trading at $4,726, up 0.47%. The move followed reports of renewed Iran\u2013US contacts over a possible second round of talks.<\/p>\n
Iran\u2019s Foreign Minister Abbas Araghchi was expected in Islamabad on Friday. The White House said Steve Wytkoff and Jared Kushner would travel to Pakistan on Saturday morning for Iran talks.<\/p>\n
After the headlines, WTI crude fell by about 3.50%. US 10-year Treasury yields dipped 1.5 basis points to 4.31%, while the US Dollar Index fell 0.22% to 98.57.<\/p>\n
Despite the day\u2019s rise, gold was still set for a 2.30% weekly loss. The University of Michigan Consumer Sentiment Index dropped to 49.8 in April from 53.3 in March, the lowest since 1978.<\/p>\n
One-year inflation expectations rose to 4.7% and five-year expectations increased to 3.5%. The Prime Terminal implied forward rate curve points to the Fed holding rates through 2026, with a first cut in July 2027.<\/p>\n
Gold traded in a $4,700\u2013$4,730 range, with resistance at the 100-day SMA of $4,729. Supports were $4,657, $4,600 and $4,554, with further levels at $4,750, $4,800 and the 50-day SMA at $4,869.<\/p>\n
We see gold caught between hopes for a peace deal in the Middle East and persistent economic worries at home. The potential for a US-Iran agreement is putting pressure on prices, as shown by the recent drop in crude oil. However, weak consumer sentiment and stubbornly high inflation expectations are providing a strong floor under the market.<\/p>\n
We should not forget the underlying support from central banks, which continued their record-breaking purchases through 2025, mirroring the trend we saw in 2022 and 2023. The World Gold Council reported that over 1,000 tonnes were added to official reserves last year, signaling a strategic shift away from the dollar. This persistent demand creates a buffer against sharp sell-offs from diplomatic news.<\/p>\n
Given the binary nature of the upcoming Iran talks, a sharp price move in either direction is highly probable. We believe that strategies that benefit from a spike in volatility, such as long straddles or strangles using options, are prudent. This allows us to profit whether a peace deal sends gold tumbling below $4,600 or failed talks propel it towards $4,800.<\/p>\n
We are closely watching the $4,700 support level; a decisive break below this could trigger a rapid move toward the $4,554 swing low. For those already holding long positions, buying puts with a strike price around $4,650 could offer cheap insurance against a sudden diplomatic breakthrough. Conversely, any sign of talks faltering would make call options targeting the $4,800 resistance an attractive short-term play.<\/p>\n
Beyond the immediate geopolitical headlines, next week’s Fed meeting and GDP data will be critical. While the market has priced in a “higher for longer” interest rate environment, any surprisingly weak economic data could reignite fears of stagflation. This scenario, reminiscent of what we saw develop through 2025, would be extremely bullish for gold, regardless of the Fed’s official stance.<\/p>\n
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