Gold futures rallied 1.8% to $4,375.4 on Friday, extending a four-session advance as renewed tension around the Strait of Hormuz and a weak US private-hiring report curbed expectations of a near-term Federal Reserve rate hike. UBS separately forecast gold reaching $5,000 an ounce in the first half of 2027, even as spot prices trade well below January's record high.
Gold futures climbed 1.8% to reach $4,375.4 during Friday's session, extending a four-session advance as renewed Middle East risk and softening US labor-market data pulled buyers into the metal. The move comes even as equities steadied after Thursday's selloff, pointing to a rally driven by commodity-specific and macro forces rather than a broad shift away from risk assets.
Hormuz tension and weak hiring drive the rally
Iran's semi-official news agency reported that a parliamentary committee is reviewing a preliminary bill that would bar U.S., Israeli, and other "hostile" vessels from transiting the Strait of Hormuz, with fines of up to 20% of a ship's cargo value for violations. Gold had briefly climbed above $4,300 on Thursday on hopes for a Hormuz deal, but that advance faded as the renewed escalation revived concerns that higher energy prices could keep inflation elevated.
Payroll processor ADP also reported a sharp slowdown in private-sector hiring in July, with most job creation concentrated in the healthcare sector. As a result, the weaker data trimmed expectations for a Federal Reserve rate hike in September, supporting gold as a non-yielding asset. Markets still assign roughly a 60% probability of a September hike, however, after reports that Fed Chair Kevin Warsh is prepared to raise borrowing costs if inflation stays elevated.
Technicals point to a bullish breakout
U.S. stocks fell Thursday, with the S&P 500 down 0.2%, the Dow Jones off 0.9%, and the Nasdaq 100 down 0.4%. Equities stabilized Friday, though, as the S&P 500 rose 0.2% and the Nasdaq gained 0.5%.
Gold holds above its 21-day and 50-day moving averages, and spot prices have advanced for four straight sessions, with a weekly close above $4,330 seen confirming the breakout. Friday's U.S. non-farm payrolls report is the next test for the metal's direction.
UBS sees $5,000 gold by 2027
Separately, UBS said it expects gold to reach $5,000 an ounce in the first half of 2027, while cautioning that near-term risks remain. Spot gold was trading around $4,295 an ounce Friday, but prices have fallen 23% from a record high of $5,594.82 in late January. UBS expects inflation to moderate gradually, letting the Fed — which held its benchmark rate in the 3.50%-3.75% range last week — keep rates steady this year before resuming its easing cycle in 2027.
Sources: Investing.com, Investing.com (Reuters)
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