Gold Surges as Strait of Hormuz Deal Hopes Lift Energy Market Fears
Gold prices surged for a third consecutive session on Wednesday, reaching a one-month high, as optimism grew over an interim agreement to reopen the Strait of Hormuz. The development eased concerns about prolonged disruptions to global energy supplies and inflation.
The prospect of lower oil prices prompted traders to scale back expectations for US Federal Reserve rate hikes, with markets now pricing in just one increase by the end of the year. Lower rates could benefit gold by reducing its opportunity cost as a non-yielding asset.
The US Treasury Secretary Scott Bessent said a deal to reopen the strait could come this week, further lifting expectations that energy markets may stabilize. However, hopes for a deal remain muted, with analysts pointing to a recurring cycle of threats and pullbacks in the Middle East conflict.