Gold rose 0.4% to $4,264.78 an ounce on Thursday, floating near a seven-week high, as hopes for a deal to reopen the Strait of Hormuz eased inflation concerns and cooled bets on a Federal Reserve rate hike. Markets now price roughly a 57% chance of a September hike, down from about 67% earlier in the week, while investors await Friday's nonfarm payrolls report.
Gold floated near a seven-week high on Thursday, as fading fears of a Federal Reserve rate hike lifted bullion demand. Spot gold rose 0.4% to $4,264.78 an ounce by 07:30 ET. Gold futures jumped 0.4% to $4,324.22 an ounce over the same stretch. The advance follows recent optimism over a potential deal to reopen the Strait of Hormuz, which has helped ease inflation concerns and reduced expectations for Fed policy tightening.
Hormuz deal hopes ease supply fears
A proposed deal between Iran and Oman would put Iran in charge of vessels moving through the Strait of Hormuz, fueling hope that the threat to global energy supplies could ease. This week, U.S. officials indicated an agreement with Iran on the strait was imminent, though some analysts remained only guardedly optimistic, citing a recent cycle of threats and pullbacks in the Middle East conflict.
Oil prices traded higher on the day but have fallen more than 9% over the past week, a slide that has pushed investors to pare back expectations for Fed rate increases.
ING said geopolitical risk premiums may keep fading, but pointed to lower oil prices and a softer dollar as reasons bullion could stay supported. According to ING: "a weaker dollar and potentially a more dovish-than-expected rates environment should remain supportive for bullion", the bank's analysts wrote in a note.
Rate-hike bets fade ahead of jobs data
Markets now price a roughly 57% probability of a September rate hike, down from about 67% earlier this week, according to CME FedWatch. A relatively subdued U.S. dollar also continued to support bullion, making the metal cheaper for overseas buyers.
The ADP National Employment Report, released Wednesday, showed private-sector hiring slowed in July, and investors are now watching Friday's nonfarm payrolls report for further clues on the Fed's policy path.
Source: Investing.com
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