Gold pushed to its highest level in seven weeks on Thursday as reports of progress toward reopening the Strait of Hormuz eased inflation worries and cooled bets on further Federal Reserve tightening. Spot gold and gold futures both advanced, and ADP data showing slower July hiring added to the case for the Fed holding rates steady in September.
By 09:42 ET, spot gold had risen 0.6% to $4,270.29 an ounce, while gold futures jumped 0.5% to $4,329.15 an ounce.
Hormuz reopening talks drive the rally
Gold stayed supported by reports that a proposed agreement between Iran and Oman would give Iran control over vessels entering the Gulf through the Strait of Hormuz, easing worries that global energy supplies could be disrupted. U.S. officials have suggested this week that a deal with Iran on the strait was imminent, though some analysts have adopted only guarded optimism, citing a recent cycle of threats and pullbacks in the Middle East conflict.
Oil prices traded higher on the day but have dropped more than 9% over the past week, a decline that has encouraged investors to scale back expectations for Fed interest rate increases.
ADP data cools rate-hike bets
On Wednesday, the ADP National Employment Report showed private-sector hiring slowed in July, turning attention to Friday's nonfarm payrolls report for further clues on the Fed's policy path. Markets are now pricing roughly a 43% probability that the Fed holds rates steady at its September meeting, down from about 37% a week ago, according to CME FedWatch.
A relatively subdued U.S. dollar also continues to underpin bullion by making the metal less expensive for overseas buyers. According to ING analysts: "a weaker dollar and potentially a more dovish-than-expected rates environment should remain supportive for bullion."
Gold's run over the past year
Gold has gained 6.1% over the past week, 3.2% over the past month and 27.4% over the past year, based on opening-price comparisons tracked by Yahoo Finance.
Sources: Commodities & Futures News, Yahoo Personal Finance
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