Gold Price Surge May be Limited by Oil Volatility

The gold market has seen a significant rally in recent weeks, with spot gold rising by 7.31% to $4342 last week, its largest weekly gain since January. This surge can be attributed to several factors, including the dovish FOMC, the possibility of a Hormuz deal, and disappointing US nonfarm payroll report for July.

However, instead of chasing this rally, buying the dips may prove to be a more effective strategy in the current market, according to Praveen Singh, Head Currencies and Commodities at Mirae Asset ShareKhan. He notes that gold prices may rise to $4500 in the short term if oil prices stabilize at lower levels.

Oil prices have been volatile recently, with a 9% decline last week followed by a 3% gain on Monday due to Iran's demands for concessions from the US. The Strait of Hormuz situation remains uncertain, and this volatility could limit gains in gold unless oil prices fall.