Gold Rally Hits Five Percent Mark as Oil Prices Weaken

Gold prices surged on Friday and were set to record their biggest weekly gain since January. The upward trend was driven by weaker oil prices, which tend to ease inflation concerns and reduce expectations of higher interest rates. Spot gold climbed 0.6% to $4,262.39 per ounce, with U.S. gold futures gaining 0.5% to $4,321.50.

Matt Simpson, a senior analyst at StoneX, attributed the rally to hopes of peace in the Middle East, which have eased inflation expectations and allowed gold to break out of its consolidation above $4,000. Simpson noted that $4,000 has proven to be a solid support level, and bulls appear to be waiting for dips to position for a potential rally towards $4,600.

The U.S. Labor Department's nonfarm payrolls report for July is due at 1230 GMT, which will provide key clues on the interest rate outlook. Traders currently see a 55% chance of a U.S. rate hike in September, down from 63% a week ago, according to the CME FedWatch Tool.