Gold Prices Surge on Hormuz Hopes Despite Hawkish Fed Comments

Gold prices are rising on hopes of an interim agreement to reopen the Strait of Hormuz, which could ease inflationary concerns and weigh on US Federal Reserve interest rate hike bets. The metal has advanced beyond $4,100, with some analysts attributing this move to the weakening oil prices. However, ING notes that gold's support is being tempered as markets continue to assess the outlook for US monetary policy following last week's Fed meeting.

The ADP Employment Change data due on Wednesday is expected to show a decline in employment growth, which could also influence the dollar's strength and gold's price. The current market pricing suggests a 55% chance of a rate cut by the Fed in September, down from about 65% previously. Despite recent hawkish comments from Fed policymakers, traders seem to be ignoring these warnings.

The technical analysis suggests that gold is still trading below its primary trend gauges, with the Relative Strength Index (RSI) at 52.8 turning marginally positive. However, the weight of the overhead moving averages remains a challenge for gold's upward trajectory.