Gold notched its best daily gain in six months and hit a seven-week high on Wednesday, as hopes for an end to the Iran war eased pressure on the Federal Reserve to raise interest rates. The metal remains down nearly 20% since the conflict started in late February, with a fresh jobs report and split Fed commentary now in focus.
Gold posted its best day in six months on Wednesday, climbing to its highest level in seven weeks, as hopes for an end to the Iran war eased pressure on the Federal Reserve to raise interest rates. The metal is still down nearly 20% from where it traded when the war started in late February.
Gold had been an unexpected casualty of the war, in the doldrums for months before Wednesday's rebound. It now appears to be benefiting from the belief that oil's sharp retreat on the latest hopes for an Iran deal will ease pressure on the Fed to hike rates before year-end.
Oil retreats as an Iran-Oman deal looms
Brent crude sulked below $80 per barrel on Thursday as Iran indicated a plan with Oman may be imminent. The arrangement appears likely to let Tehran retain control of inbound traffic to the Strait of Hormuz, and whether Washington accepts that is far from certain.
Below-forecast private-sector jobs gains for July reported by ADP on Wednesday, along with the softer oil price, has helped take some of the heat out of the rates market and Treasuries. All eyes are now on the July U.S. payrolls report due out next.
Fed officials diverge on next move
But markets are also weighing what Fed officials are saying ahead of next month's meeting. Fed governor Lisa Cook said overnight she was prepared to raise rates if inflation didn't come down soon. At the same time, the San Francisco Fed's Mary Daly indicated she was more comfortable with the Fed's current stance as it awaits more data.
Central banks' own gold buying, and the metal's place in investment portfolios as a diversifier, add another layer to the move beyond the Iran-driven swings in rates and oil.
Source: Commodities & Futures News
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