Gold Surges Above $4,300 as Rate Hike Expectations Diminish

Gold prices have surged over 7% in the past week, breaking out of their range since mid-June to finish trading above $4,300 per ounce. This uptick is largely attributed to renewed optimism about a deal to reopen the Strait of Hormuz, which has led to lower oil prices and reduced expectations for rate hikes from the Federal Reserve.

The Federal Open Market Committee (FOMC) meeting in September now seems less likely to bring a rate hike, as oil prices have dropped below $85 per barrel after hitting $100 on July 23. Central bank gold buying has also accelerated, with reported reserves increasing by 51 tonnes in June, nearly double the 12-month average.

Poland and China were the largest buyers, adding 19 tonnes and 15 tonnes respectively, while Uzbekistan, Kazakhstan, Singapore, Jordan, and the Czech Republic also increased their gold holdings. Russia and Turkey, on the other hand, sold a combined 11 tonnes in June.