Gold traded lower on Wednesday despite a weaker US Dollar. It was near $4,807 after touching a one-month high of $4,871 in the Asian session.
Reports pointed to possible US-Iran talks as early as this week, before a two-week ceasefire ends. Iranian state media said a Pakistani delegation was travelling to Iran to pass on a US message and discuss a second round of talks.
The Washington Post reported the Pentagon may deploy thousands more troops to the Middle East in coming days. The US blockade of the Strait of Hormuz remains in place, and a CENTCOM commander said US forces have halted sea trade into and out of Iran.
WTI traded near $89 after dipping to around $85, a level last seen more than three weeks ago. Iran’s Revolutionary Guards said they would block imports and exports across the Gulf and the Sea of Oman if the blockade continues.
Oil’s pullback eased inflation worries and lifted rate-cut expectations, which can support gold. Cleveland Fed President Beth Hammack said rates are “in a good place” and her baseline is to stay on hold “for a while”.
On the 4-hour chart, gold faced resistance at the 200-period SMA near $4,837 and held above the 100-period SMA near $4,637. RSI (14) was near 57, and MACD stayed positive, with $5,000 as an upside level if resistance breaks.
Last year, we were watching for a breakthrough in US-Iran talks to ease tensions and potentially lower gold prices. Those hopes have faded, as the diplomatic track stalled and the Strait of Hormuz remains a flashpoint for conflict. This persistent geopolitical risk provides a floor for gold, unlike the more optimistic outlook we saw in 2025.
The Federal Reserve’s stance is now a significant headwind, which was not as clear a year ago when officials were content to hold rates. With the Federal Funds Rate at 5.75% and the latest March CPI data showing inflation at a stubborn 3.8%, the case for rate cuts in 2026 has weakened considerably. This high-rate environment makes holding non-yielding gold more expensive.
This dynamic has led us to see a clear shift in market positioning compared to the cautiously bullish sentiment of 2025. Recent CFTC data shows that managed money net long positions in gold futures have decreased by 15% over the past six weeks. The CBOE Gold Volatility Index (GVZ) has also drifted lower to around 16, making options strategies cheaper than during the flare-ups we saw last year.
Considering gold is now trading near $4,550, well below the $4,800 levels of 2025, traders could look at strategies that benefit from this new reality. Selling call credit spreads with a strike price above the recent resistance of $4,700 could be a way to collect premium from the capped upside. For those anticipating a break lower due to Fed pressure, purchasing long-dated put options offers a defined-risk way to position for a drop toward the $4,400 support level.
