Gold (XAU/USD) traded around $4,532 after rebounding from last week’s $4,100 support, following an early March peak at $5,420. Prices have moved higher beyond $4,500, with indicators recovering from oversold readings.
The US Dollar Index has stayed firm, supported by higher US Treasury yields and expectations of at least one US Federal Reserve rate rise this year. The DXY is nearing resistance at 100.50.
Near Term Technical Outlook
On the 4-hour chart, the near-term bias is mildly bullish, with a higher low suggesting reduced downward pressure. The RSI is at 53.58, above 50, while MACD remains above the Signal line in positive territory with a modestly positive histogram.
Resistance is near the 38.2% Fibonacci retracement at about $4,610. A move above that level would open $4,735 and then $5,040, with $5,000 also noted as a key area.
Support levels include $4,355, the March 26 low, followed by $4,100, the March 23 low. The story was corrected on March 30 at 11:40 GMT to confirm $4,735 as the March 20 high and $4,355 as the March 26 low.
Central banks added 1,136 tonnes of gold worth around $70 billion in 2022, the highest annual purchase on record. Gold often moves inversely to the US Dollar, US Treasuries, and risk assets, and can react to interest rates, inflation, and geopolitical stress.
Options Positioning Considerations
Looking back at the analysis from March 2025, we can see the bullish turn played out, with Gold now hovering just below the old $4,735 resistance area. This price action is encouraging, but options traders should be cautious as the US Dollar Index remains elevated. The DXY is currently trading around 104.20, well above the 100.50 resistance level we watched last year.
The environment has shifted significantly since the rate hike fears of 2025. We now see the futures market pricing in a 70% chance of at least one Federal Reserve rate cut by the end of this year, a tailwind for non-yielding gold. This view is complicated by the February 2026 CPI data, which came in hotter than expected at 3.4%, reinforcing gold’s appeal as an inflation hedge.
Given the conflicting signals between Fed cut expectations and a strong dollar, we expect implied volatility to remain elevated in the coming weeks. Traders might consider buying call options with a strike price above $4,750 to play a potential breakout. However, given the dollar risk, purchasing put options with a strike near $4,600 could serve as a valuable hedge against a sharp rejection at resistance.
Underpinning the long-term bullish case is the continued, aggressive buying from central banks. Following the record purchases we saw in the early 2020s, official sector buying remained robust through 2025, with the World Gold Council reporting net purchases exceeding 1,000 tonnes for the second consecutive year. This provides a strong fundamental floor, suggesting any significant dips might be viewed as buying opportunities by these large players.
