Gold Prices Soar 6% on Falling Oil and Lower Rate Hike Bets

Gold prices surged over 6% this week and are heading for their strongest weekly gain since January, as plunging crude oil prices eased inflationary pressures. At 1:35 p.m. on August 7, Vietnam time, spot gold rose 1.1% to $4,285.89 per ounce, after hitting a seven-week high in the previous session.

The rally was fueled by the decline in energy prices, which were pulled down by U.S. President Donald Trump's statements regarding the prospect of ending the conflict with Iran. This led to decreased inflation forecasts and created conditions for gold prices to break out strongly from a multi-week consolidation phase above the $4,000 per ounce level.

Analyst Matt Simpson noted that regardless of the outcome of the upcoming U.S. Department of Labor's nonfarm payrolls report, the $4,000 per ounce level has proven to be an extremely solid support floor. Traders are now pricing in a 55% probability that the U.S. Federal Reserve will raise interest rates in September, down significantly from 63% a week ago.