Gold Soars as Inflation Fears Ease and Rate Hike Expectations Plummet

Gold prices are poised to end the week with their biggest weekly gain since January. Spot gold has risen by 2.1% to $4,326.59 per ounce as of Friday morning. U.S. gold futures have also increased by 2%, reaching $4,386.10.

The surge in gold prices is attributed to easing inflation worries tied to a Middle East peace deal and reduced expectations of U.S. rate hikes. The implied probability of an increase in U.S. interest rates in September has decreased to 55% from 67% last week, according to the CME FedWatch Tool.

Gold's performance is closely linked to Federal Reserve policy expectations. As long as there are lower chances of rate hikes, gold prices will likely remain stable or even rise further. The metal has broken above its 50-day moving average this week and is now supported at $4,151.

The next resistance level for gold is the 100-day moving average at $4,389. However, analysts caution that the U.S. jobs market data due on Friday may impact gold prices. A resilient labor market could lead to higher interest rates and subsequently hurt gold's appeal.