Gold (XAU\/USD) eased to about $4,605 in early Asian trading on Monday. Markets are watching geopolitical tensions, and New York Fed President John Williams is due to speak later on Monday.<\/p>\n
According to Bloomberg, mediation efforts to end the Iran war continued after US President Donald Trump indicated Tehran\u2019s latest peace proposal may not meet his demands. Trump also said the US will start guiding some neutral ships trapped in the Persian Gulf through the Strait of Hormuz from Monday.<\/p>\n
An Iranian official said US involvement in Hormuz would be treated as a ceasefire violation. The official added that the Strait of Hormuz and the Persian Gulf are not a place for rhetoric.<\/p>\n
Higher Middle East tensions can raise inflation concerns and reduce the chance of interest rate cuts, which can pressure gold. Gold is often used in times of uncertainty but pays no interest, so it can be less appealing when rates are high.<\/p>\n
Central bank buying may limit further falls. The Reserve Bank of India has brought back over 100 metric tons of gold to India for a third straight year and held about 880 metric tons at end-March 2026.<\/p>\n
The current standoff in the Persian Gulf creates significant two-way risk, which we see priced into the market. Implied volatility on near-term gold options has already climbed above 25%, suggesting traders are bracing for a sharp move. This makes simply holding a directional futures position very risky in the coming weeks.<\/p>\n
We must pay close attention to the risk of renewed inflation from any potential conflict. After the difficult period in 2025 where core CPI briefly touched 4.5%, the Federal Reserve has been very sensitive to price pressures. A hawkish tone from John Williams could easily send gold lower, making protective put options or bear put spreads a sensible hedge against existing long positions.<\/p>\n
On the other hand, a direct military escalation would trigger an immediate flight to safety. We all remember the brief spike in Brent crude to over $130 a barrel in October 2025 during a similar incident, which propelled gold higher even amid rate concerns. Therefore, holding some out-of-the-money call options could provide substantial upside with limited risk.<\/p>\n
Underneath it all, the strong demand from central banks provides a solid floor for the price. The repatriation by the Reserve Bank of India continues the aggressive buying trend we saw from global central banks throughout 2024 and 2025, which added over 1,000 metric tons to official reserves each year. This persistent demand is likely to absorb any moderate dips in the gold price.<\/p>\n
Given these opposing forces, strategies that benefit from a large price move, regardless of direction, should be considered. We are looking at implementing long straddles or strangles to capitalize on this heightened uncertainty. This positions us to profit from either a geopolitical shock driving prices higher or a hawkish Fed causing a sharp pullback.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Gold slips near $4,605 as Hormuz tensions and Fed speech loom, while central-bank buying supports prices.<\/p>\n","protected":false},"author":103,"featured_media":16980,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-49311","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t