Gold Soars on Strait of Hormuz Reopening Hopes, Hits 7-Week High
Gold prices have reached their highest level in seven weeks, climbing 1% to $4,285.84 per ounce. US gold futures rose 0.9% to $4,345.80. The increase in gold prices is attributed to weakening oil prices, a softer dollar, and lower Treasury yields.
The Strait of Hormuz reopening hopes have contributed significantly to the surge in gold prices. A proposed deal between Iran and Oman would give Tehran control over ships entering the Gulf through the Strait of Hormuz. This has led to optimism that a diplomatic breakthrough is close to being finalized.
IG market analyst Tony Sycamore believes that a sustained break above the 200-day moving average could pave the way for a stronger recovery towards the $5,000 mark. However, investors are also awaiting the July US nonfarm payrolls report scheduled for release on Friday, which could impact gold prices.
The yield on benchmark U.S. 10-year notes fell, and the U.S. dollar index was under pressure, making dollar-priced commodities cheaper for other currency holders. A weaker U.S. currency also adds support to gold prices.