Gold prices extended gains for a fourth consecutive session on Thursday, reaching a seven-week high as growing optimism over a potential agreement to reopen the Strait of Hormuz pressured oil prices, the U.S. dollar, and Treasury yields.
At 22:20 ET (02:20 GMT), XAU/USD climbed 1.1% to $4,293.94 per ounce after hitting an intraday peak of $4,304.15, while Gold Futures advanced 1.1% to $4,353.12. Silver (XAG/USD) rose 0.5% to $62.39, and Platinum (XPT/USD) gained 2.3% to $1,774.68.
Hormuz deal hopes lift gold as Fed tightening expectations soften
Gold attracted fresh buying interest after reports indicated that a diplomatic breakthrough in the Middle East may be approaching, fueling hopes that disruptions to global energy supplies could ease and helping to alleviate inflation concerns.
According to Reuters, a proposed arrangement involving Iran and Oman aimed at ending the five-month standoff between Tehran and Washington would grant Iran oversight of vessels entering the Gulf through the Strait of Hormuz. The prospect of such a deal weighed on oil prices.
The decline in energy prices has led investors to scale back expectations for additional Federal Reserve rate increases. Markets currently assign about a 55% chance of a September rate hike, down from 67% just two days earlier.
Meanwhile, benchmark U.S. Treasury yields edged lower and the U.S. Dollar Index (DXY) remained under pressure, improving the appeal of dollar-denominated gold for international investors and providing further support for bullion prices.
Payrolls report in focus as next key market driver
Despite gold’s recent advance, investors are closely watching upcoming U.S. labor market data for fresh signals on the Federal Reserve’s interest-rate outlook.
The latest ADP National Employment Report showed that private-sector job growth slowed in July, shifting market attention to Friday’s highly anticipated nonfarm payrolls (NFP) report for a clearer assessment of labor market strength.
Analysts at ANZ noted that gold’s rally gained traction as expectations for a reopening of the Strait of Hormuz helped ease inflation concerns, reducing the likelihood of further Fed tightening.
They also highlighted that bullion’s gains accelerated after prices broke above an important technical resistance level. However, Federal Reserve Governor Lisa Cook reiterated that policymakers remain prepared to raise interest rates if inflation does not continue to moderate, emphasizing that the Fed cannot afford to wait until inflation fully returns to its 2% target before taking action if necessary.
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