Gold Surges Over 5% on Weaker Oil Prices and Middle East Hopes

Gold prices surged this week, gaining over 5% to reach $4,262.39 per ounce by Friday morning GMT. This marks the biggest weekly gain for gold since January.

The rally is attributed to several factors, including weaker oil prices and hopes of peace in the Middle East. According to Matt Simpson, a senior analyst at StoneX, easing inflation expectations have allowed gold to break out of its consolidation above $4,000.

Crude oil prices are headed for a weekly loss, which tends to ease inflation concerns and reduce expectations of higher interest rates. As an inflation hedge, gold benefits from lower energy prices, but elevated rates typically weigh on its appeal since it offers no yield.

The U.S. Labor Department's nonfarm payrolls report for July is due at 1230 GMT, which may provide further clues on the interest rate outlook. Simpson notes that $4,000 has proven to be a solid support level regardless of how the payrolls data plays out.