Gold extended a technical breakout on Friday as traders weighed renewed tension in the Strait of Hormuz against the U.S. July payrolls report due later in the session. IG's Tony Sycamore said the report could decide whether the rally holds, while a roughly 55% chance of a September rate hike keeps bullion's near-term path split between Fed policy and Middle East risk.
Spot gold rose 1.9% to $4,322.45 an ounce by 07:03 ET Friday, while gold futures added 2.0% to $4,383.05 an ounce. Traders now await the U.S. July payrolls report and are gauging a fresh flare-up in the Strait of Hormuz.
Gold nears the 200-day average
Tony Sycamore, senior market analyst at IG, said the breakout suggests gold may have confirmed a bottom near the late-June low around $3,942, after earlier price action had cast doubt on that view. Holding above that level, he said, would strengthen the case for the rally to reach the 200-day moving average near $4,489, and a sustained break above that could open the door toward $5,000.
Separately, investingLive's European markets wrap put gold up 1.8% at $4,316 during the morning session, with the 100-day moving average at $4,390 the next technical hurdle after Wednesday's breakout.
Payrolls report looms over the Fed's path
Sycamore said Friday's nonfarm payrolls report will likely decide whether the breakout turns into a durable advance or loses momentum. Investors expect U.S. job growth to have stayed resilient in July, which could give the Fed more room to raise rates against energy-fueled inflation. St. Louis Fed President Alberto Musalem said policymakers cannot afford to tolerate persistently high inflation while waiting for the possibility that stronger productivity growth may eventually ease price pressures.
Markets are now pricing roughly a 55% probability of a September rate hike, according to CME FedWatch. The Financial Times reported that Fed Chair Kevin Warsh is prepared to back higher borrowing costs if inflation stays elevated. Higher rates could raise the opportunity cost of holding non-yielding gold. The U.S. dollar index hovered just below the 100 level, offering little fresh direction for bullion.
Hormuz tensions resurface
Iranian media reported that Tehran struck targets it described as hostile in the Strait of Hormuz and plans to bar U.S. and Israeli vessels from the strait, even as officials said a deal with Oman to reopen shipping lanes was nearing completion. Iran-backed Houthi militants in Yemen also carried out a fresh attack on Saudi Arabia, raising concern the conflict could broaden. President Trump, however, said he believes the conflict will end "pretty soon" and that the U.S. remains in control of the strait.
Gold briefly climbed above $4,300 on Thursday as optimism around a Hormuz deal fueled buying, but the rally faded once renewed escalation revived concern that higher energy prices could keep inflation elevated. Chinese investment demand has also bolstered gold: bullion-backed ETFs in China have logged 14 consecutive sessions of inflows, helping stabilize prices despite broader macroeconomic headwinds.
Sources: Investing.com, investingLive
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