Gold traded near one-month lows on Wednesday ahead of the Federal Reserve decision due at 18:00 GMT. XAU/USD was around $4,546 after dipping to $4,510, down nearly 3.5% this week.
Markets expect the Fed to keep rates unchanged at 3.50%–3.75% for a third meeting. Focus is on Jerome Powell’s guidance and whether the dot plot still points to one cut, as CME FedWatch shows most 2026 rate-cut bets have been priced out.
Fed Decision And Oil Driven Yields
Rising Oil prices linked to Middle East tensions are adding inflation pressure and supporting higher US Treasury yields. This has weighed on demand for Gold, while uncertainty has supported the US Dollar.
Reuters cited a White House official saying President Donald Trump and oil companies discussed steps to maintain the Iran blockade for an extended period. Supply through the Strait of Hormuz was described as severely disrupted under a dual blockade.
On the 4-hour chart, Gold remained below the 200-, 50- and 100-period SMAs clustered between about $4,698 and $4,742. RSI (14) was near 31, MACD stayed negative, resistance sits at $4,698, $4,710 and $4,742, and support is in the $4,550–$4,500 zone.
Looking back at the situation in 2025, we recall how gold was struggling under the weight of high oil prices and the conflict between the US and Iran. The market was watching gold hover near $4,500, pinned down by expectations of a Federal Reserve that would have to keep interest rates higher for longer. At the time, the Fed Funds rate was in the 3.50%-3.75% range.
As of today, April 29, 2026, the environment has changed considerably, as the Fed did indeed follow through on its hawkish stance to combat that inflation. The target rate now stands at a much higher 4.50%-4.75%, which has kept sustained pressure on non-yielding assets. Fortunately, the geopolitical situation has de-escalated, with WTI crude oil falling from its 2025 peaks of over $115 a barrel to trade around $85 today.
Options Positioning In A Higher Rate World
This cooling of geopolitical and energy-price tensions has helped bring inflation down, with the latest year-over-year CPI report for March showing a more manageable 3.1%. As a result, gold has continued its downward trend and is currently trading near $4,120 an ounce. The safe-haven premium that was built into its price last year has almost completely eroded.
For derivative traders, this means the high implied volatility we saw during the 2025 conflict has vanished, which is reflected in the VIX index now hovering around a calm 18. This makes buying options cheaper than last year, so purchasing puts to protect against further downside in gold is a more affordable hedging strategy now. The primary risk to gold is no longer war, but the persistence of high interest rates.
With the Fed still signalling a patient approach, short-term call options on gold hold little appeal until we see a clear dovish pivot. Instead, strategies that benefit from sideways or downward price action, such as selling covered calls against existing gold positions, could be considered to generate income. Bear call spreads offer another way to position for gold remaining capped below key resistance levels in the coming weeks.
