Gold traded with an upward bias on Tuesday but stayed within a one-week range. XAU/USD was about $4,618, up nearly 2.30%, while the US Dollar Index was near 100.12 after reaching 100.64.
Reports said Donald Trump was willing to end the US military campaign against Iran even if the Strait of Hormuz stayed largely closed. The same report said the US still aimed to weaken Iran’s naval and missile capacity and keep diplomatic pressure to restore trade flows.
Iran Risk And Strait Of Hormuz
Iran’s Islamic Revolutionary Guard Corps warned it could target US companies in the region from 1 April. A parliamentary committee also approved plans to impose tolls on shipping through the Strait of Hormuz.
Gold was described as facing pressure from higher-for-longer interest rate expectations and firm US dollar demand, and it was on track for its worst monthly decline since October 2008. The CME FedWatch Tool showed expectations for the Fed to keep rates at 3.50%–3.75% through 2026.
Technically, XAU/USD traded above the 50-period SMA at $4,494, with resistance near $4,600 and the 100-period SMA at $4,773. Support levels included $4,300–$4,400 and a March swing low near $4,100.
Central banks added 1,136 tonnes of gold worth about $70 billion in 2022, the highest annual purchase on record. Gold often moves inversely to the US dollar and US Treasuries.
Trading Setup And Breakout Watch
We see gold is caught in a tug-of-war, with the price hovering around $4,618. Geopolitical tensions in the Middle East are providing support, but the prospect of the Federal Reserve keeping interest rates high is limiting any significant rally. This indecision creates opportunities for traders who can play both sides of the market.
The situation with Iran remains a key factor for the coming weeks. While there are hopes for de-escalation, recent data shows shipping volume through the Strait of Hormuz fell by 15% in the first quarter of 2026, which keeps oil prices and risk premiums elevated. We should watch for any definitive moves toward peace, as that could quickly remove a pillar of support for gold’s current price.
On the other hand, the Federal Reserve’s stance is a major headwind. The latest US inflation reading came in at 3.1%, slightly above forecasts, and the last jobs report showed a robust 250,000 new jobs were added. This strong economic data supports the market’s view that the Fed will hold interest rates steady at 3.50%-3.75% for the foreseeable future, making non-yielding gold less attractive.
We must also consider the underlying demand from official institutions. Looking back, we remember the record central bank buying of 1,136 tonnes in 2022, and this trend has continued, with an additional 250 tonnes purchased in the last quarter of 2025. This consistent buying provides a long-term floor for the price, but it is struggling against the strength of the US dollar.
Given this setup, a breakout from the current range seems imminent. Traders could use options to prepare for a move in either direction, such as buying call options on a decisive break above the $4,600 resistance level. Conversely, a failure to hold the $4,494 support level could be a trigger to buy puts, targeting the $4,300 area.
