Gold prices climbed for a fourth consecutive session on Thursday, reaching a seven-week high, bolstered by growing expectations that the Strait of Hormuz could reopen. The rally was further supported by lower oil prices, a weaker U.S. dollar, and declining Treasury yields.
By 9:32 a.m. Beijing time, spot gold had risen 1% to $4,285.84 per ounce, its highest level since June 18. On Wednesday, spot gold posted its largest single-day gain since February. U.S. gold futures added 0.9%, settling at $4,345.80.
"This strong rally is driven by rising optimism that a diplomatic breakthrough in the Middle East is imminent. This, in turn, continues to put downward pressure on oil prices and reduces the need for central banks to raise interest rates, providing a clear supportive backdrop for gold," said IG market analyst Tony Sycamore.
He added that if gold can sustain a level above its 200-day moving average, it could pave the way for a stronger push toward the $5,000 mark. A senior Iranian source and two regional officials told Reuters that a potential deal between Iran and Oman aims to help end the five-month conflict between Iran and the United States. The agreement would grant Tehran control over vessel access through the Strait of Hormuz into the Persian Gulf.
Oil prices retreated on Thursday. Since the outbreak of the U.S.-Iran conflict on February 28, spot gold prices have fallen 19%, driven by fears that energy-driven inflation would lead to higher interest rates. Because gold yields no interest, it tends to perform better in a low-rate environment.
As market sentiment grows increasingly optimistic, expectations for a Federal Reserve rate hike in September have dropped to 55% from 67% two days ago. The benchmark 10-year U.S. Treasury yield declined, while the U.S. dollar index also came under pressure. A weaker dollar makes dollar-denominated commodities cheaper for investors holding other currencies.
Investors are now awaiting the release of the July U.S. nonfarm payrolls report on Friday. The ADP National Employment Report showed that private sector employment growth slowed in July. Joshua Rotbart, founder of J. Rotbart & Co., noted that weak employment data would further support gold prices, while a strong rebound could create short-term pressure by prompting a reassessment of the policy timeline.
Among other precious metals, spot silver edged up 0.1% to $62.16, while platinum gained 1.7% to $1,764.10, after earlier hitting its highest level since June. Palladium rose 1.1% to $1,377.83, marking its third consecutive day of gains.
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