Spot gold continued its elevated trading range during the Asian and European sessions on Friday, rising 1.21% to trade near $4,291. Despite limited positive news and a significant rebound in oil prices, the precious metal's upward momentum remains unbroken.
U.S. President Donald Trump expressed confidence that the war with Iran would "end soon," but no formal negotiations have been scheduled between the two sides. Shipping traffic through the Strait of Hormuz remains sporadic, and market participants recall a brief agreement earlier this year, leading to weak confidence that a new deal can fully restore normal maritime operations. In this context, gold's strength may be more attributable to bets that tonight's non-farm payroll data will continue to weaken, along with bargain-hunting capital after a sharp decline and a recent improvement in global risk appetite that has brought in more buyers.
Five months ago, Trump launched military operations against Iran in coordination with Israel. The conflict has persisted, with control and navigation of the Strait of Hormuz serving as the core point of contention between the U.S. and Iran. This critical waterway, which handles approximately 20% of global oil transport, is not only a vital artery for energy supply chains but also a key battleground. To reach a settlement and resume normal navigation through the strait, Trump would need to compromise against his typically强硬 style, a politically costly move for a leader who views governance through a win-lose binary lens.
U.S.-Iran Negotiations Stalled: Core Differences Persist, Trump Faces Compromise Dilemma
Both the U.S. and Iran have signaled that an agreement is near, but fundamental differences in core demands remain, keeping negotiations deadlocked. Iran insists on retaining partial control over the Strait of Hormuz, stating that the waterway cannot return to its pre-war state of完全 free and open international navigation, and has proposed imposing transit fees. In contrast, the Trump administration has firmly rejected any proposal that would enhance Iran's influence over Persian Gulf waterways, including all toll-related terms. A temporary navigation framework under discussion involves a differentiated passage model: ships would enter the Persian Gulf via Iranian-controlled channels and exit through Omani-controlled channels, with the U.S. insisting that no tolls or obstacles be applied to the temporary route. U.S. officials have revealed that diplomatic mediation remains Trump's preferred option, and while Washington believes it holds all the leverage in negotiations with Iran, progress remains sluggish.
Strait Traffic Remains Low, Shipping Risks Not Fully Resolved
Despite thousands of U.S. airstrikes on Iran, the country retains the ability to harass commercial shipping with drones, missiles, and mines, effectively disrupting traffic through the Strait of Hormuz. Shipping volumes have remained persistently low, with energy transport stability unattainable. Data shows fluctuating but generally depressed traffic: previously, weekly vessel counts in the strait recovered from 45 to 84, but compared to the pre-crisis norm of over 700 vessels per week, the gap remains enormous. This week, ongoing market monitoring of talks between Iran and Oman further suppressed activity, with only 33 vessels transiting the strait from Monday to Thursday, a significant drop from 50 vessels during the same period last week. On Thursday alone, just four vessels passed, including a very large crude carrier named "Nisos Kia" carrying 2 million barrels of Iraqi Basra crude. The remaining three vessels consisted of two liquefied petroleum gas carriers and one small bulk carrier, reflecting a narrow traffic structure and extremely low trading activity. Meanwhile, shipping risks persist, with at least two vessels attacked or damaged in the strait over the past week and multiple ships experiencing close-range attacks or warnings from Iran's Revolutionary Guard. The "barely open" status of the strait, as claimed by the U.S., has yet to achieve safe and stable navigation.
Domestic and International Pressure on the U.S. Sets Stage for Easing
The prolonged war with Iran has placed the U.S. under significant internal and external pressure. Militarily, there is a notable shortfall in advanced anti-missile interception munitions used to defend against Iranian attacks and protect overseas forces, with key weapons stockpiles declining. While Trump has publicly acknowledged that some ammunition reserves are "slightly tight," he has consistently denied a stockpile crisis caused by the war and even threatened to hold those leaking data on weapons inventories accountable. The U.S. Department of Defense is actively lobbying Congress for billions of dollars in additional military funding to replenish wartime equipment losses. Domestically, anti-war sentiment continues to grow. A late-July poll by the Associated Press-NORC Center for Public Affairs Research showed that about two-thirds of U.S. adults view the war with Iran as not worth the cost, spanning a majority of Democrats and independents, and including 37% of Republican supporters. The conflict has driven up gasoline prices and weighed on economic sentiment, which could negatively impact Republican prospects in the November midterm elections. Multiple former government officials have analyzed that mounting economic and political pressures may force Trump to make concessions on the Strait of Hormuz issue. The market has also picked up signs of easing, with Trump publicly stating that he believes the U.S.-Iran war will likely end soon, laying the groundwork for a de-escalation of geopolitical tensions in the Middle East and a decline in risk appetite.
Easing Middle East Geopolitics Drives Strong Gold Rally
The expectation of a U.S.-Iran détente has completely reshaped the trading logic for commodities and precious metals, serving as the core driver of gold's recent surge. As tensions in the Middle East cool, global inflation expectations continue to recede. International crude oil is on track for a weekly decline, and lower energy prices further alleviate high inflationary pressures. The market is increasingly pricing in a scenario where the Federal Reserve does not maintain high interest rates for an extended period. Gold, as a non-yielding inflation hedge asset, is closely tied to interest rate expectations: a high-rate environment significantly diminishes its appeal. The cooling of inflation and loosening of high-rate expectations have directly broken gold's previous range-bound pattern. Matt Simpson, a senior analyst at StoneX, noted that thanks to easing signals from the Middle East, gold has successfully broken out of a multi-week consolidation range above $4,000, initiating a trend-driven rally. This week, spot gold has gained 6%, marking its best weekly performance since January, and has climbed to a seven-week high above $4,285 per ounce. Looking ahead, the market currently prices the probability of a Fed rate hike on September 16 at 55%. The upcoming U.S. July non-farm payroll data may introduce short-term noise but is unlikely to alter gold's overall bullish pattern. Analysts at OCBC Bank noted that short-term momentum has improved, but the upcoming employment data will be key in determining whether yields, the U.S. dollar, and gold's breakout can be sustained. Industry analysis emphasizes that the $4,000 level has formed a solid support, with bulls waiting for a technical correction to target the $4,600 level. Meanwhile, Marex's research report is also optimistic about gold's performance in August, suggesting a broader trading range and, combined with ongoing expectations for U.S.-Iran talks and strait navigation, ample momentum for the current gold rally to continue.
On the technical front, spot gold has broken above the upper trendline of its descending channel and the top of its box range. The measured upside target is near $4,394, with support at the bottom of the box range and around $4,150.
As of 16:27 Beijing time, spot gold was trading at $4,295 per ounce.
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