Francis Kokoroko | Reuters
Goldadvanced for a fourth straight session on Thursday and touched its highest level in seven weeks, helped by weaker oil prices, a softer dollar and lower Treasury yields, on growing hopes over the Strait of Hormuz reopening.
Spotgoldwas up 1% at $4,285.84 per ounce, the highest level since June 18. On Wednesday, bullion posted its biggest daily gain since February.
U.S.goldfuturesrose 0.9% to $4,345.80.
“The sharp rally came on building optimism that a diplomatic breakthrough in the Middle East is close to being finalized. This in turn would keep downside pressure on oil prices and reduce the need for central banks to raise rates, providing a clear tailwind forgold,” IG market analyst Tony Sycamore said.
A sustained break above the 200-day moving average could pave the way for a stronger recovery toward the $5,000 mark, he added.
A proposed dealbetween Iran and Oman to help end five months of war between Iran and the United States would give Tehran control over ships entering the Gulf through the Strait of Hormuz, a senior Iranian source and two regional officials told Reuters. Oil prices slipped on Thursday.
Spotgoldhas declined 19% since the onset of the U.S.-Iran conflicton February 28, due to fears of energy-driven inflation prompting higher interest rates.Goldtends to perform better in a low interest-rate environment as it yields no interest.
Growing optimism has seen market expectations for a September U.S. rate hike ease to 55% from 67% two days earlier.
The yield on benchmark U.S. 10-year notes fell and the U.S. dollar index was also under pressure. A weaker U.S. currency makes dollar-priced commodities cheaper for other currency holders.
Investors are also awaiting the July U.S. nonfarm payrolls report scheduled for release on Friday. The ADP national employment recordshowed that U.S. private payrolls growth slowed in July.
A soft payrolls reading would add further support togold, while a strong rebound could create short-term pressure as markets reassess the policy timeline, said Joshua Rotbart, founder of J. Rotbart & Co.
Among other metals, spot silvergained 0.1% to $62.16, platinum was up 1.7% to $1,764.10 after hitting its highest level since June.
Palladiumclimbed 1.1% to $1,377.83, up for a third consecutive session.
About The Author
