Gold eased on Thursday as a firmer dollar, rebounding oil prices, and climbing Treasury yields pulled bullion back from its best session since early February. A report on the terms of a possible Strait of Hormuz reopening pushed oil higher, while investors awaited Friday's July jobs report for clues on the Federal Reserve's next move.
Spot gold shed 0.3% to $4,236.42/oz on Thursday, weighed down by a firmer dollar and rising oil prices. Gold futures also slipped 0.2% to $4,295.30/oz as the same pressures took hold. The retreat followed bullion's best session since early February, when hopes for an imminent deal to reopen the Strait of Hormuz drove prices higher.
Oil rebounds on Hormuz deal doubts
Gold had climbed earlier this week as investors rotated out of the safe-haven dollar and into risk assets, with sliding oil prices on Hormuz reopening hopes supporting that shift. But crude reversed course on Thursday after a media report said an Iranian-Omani framework to reopen the strait would bar U.S. vessels from passage until compensation is paid.
Iran's Fars News said the initial text of the plan remained under review by authorities, citing parliament member Alireza Salimi, with passage of U.S., Israeli, and other hostile vessels barred until compensation is paid. President Donald Trump said this week he called off a planned attack against Iran given progress toward a deal, while warning Washington remains ready to act if no agreement is reached.
Yields climb ahead of jobs report
Gold was also pressured on Thursday by jitters over the path of monetary policy, with the dollar strengthening and traders dumping government bonds to push up Treasury yields. Friday's July nonfarm payrolls report will likely provide the next marker for interest rates. Job openings growth in June came in lower than expected and moderated from May, while private employment growth in July decelerated from June.
Initial jobless claims stayed below 200,000 for a third straight week, a streak rarely seen since the late 1960s. Resilient labor data also reinforced the Federal Reserve's recent shift toward focusing more on its inflation mandate, even as swings in oil prices tied to the Middle East conflict have divided Fed policymakers over the right policy path.
The weaker data has pushed the market-implied probability of a September Fed rate hike to roughly 55%, down from roughly 70% at the end of July, said Thierry Wizman, global FX and rates strategist at Macquarie, noting the shift also reflects this week's weaker dollar. Macquarie's Wizman added that the Fed's discourse "has tilted toward a hawkish bias."
Source: Commodities & Futures News
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