Gold Prices Soar as Iran-Oman Deal Eases Energy Price Pressures

Gold prices surged by their largest margin in six months after Iran and Oman agreed on a temporary shipping route through the Strait of Hormuz. This easing of energy price pressures triggered a jump in gold prices, which rose 1% to $4,347.90 per ounce at 09:57 Singapore time on Thursday, August 6.

The precious metal had previously increased by 4.1% the day before, marking its largest gain since February 3. The Straits Times reported that oil prices are still declining, with Brent crude trading near $79 a barrel and West Texas Intermediate (WTI) in the range of $75.

TD Securities analysts believe that reduced macroeconomic pressure and hopes for a US-Iran deal are driving up gold prices. Discretionary macro investment funds have more than doubled their positions since June, while large funds on the Shanghai Futures Exchange and exchange-traded gold-based investment products or gold ETFs in Asia have also seen increased support.

However, TD Securities warns that the still tight energy market remains a major obstacle to a longer gold price rise. The Bank of Korea is also preparing rules for buying refined gold in South Korea, which could further boost demand if implemented.