Gold Surges Past $4,300 as US-Iran Talks Weigh on Fed Hike Odds
Gold prices surged this week to their highest level in seven weeks, reaching $4,326 on Friday. This rise is attributed to cooling inflation fears tied to US-Iran peace talks and a sharp drop in September Fed rate hike odds from 67% last week to approximately 55%. The progress toward reopening the Strait of Hormuz sent crude oil prices lower by roughly 10%, easing near-term inflation pressure.
The decrease in oil prices has cut the CME FedWatch-implied probability of a September rate hike, making gold's price surge not a classic fear-driven safe-haven bid but rather a lower-real-rates trade. According to Kyle Rodda, senior market analyst at Capital.com, 'this is not a classic fear-driven safe-haven bid, it is a lower-real-rates trade'. This distinction matters for investors watching Fed rate-hike odds and Bitcoin for macro direction.
Silver joined the move, surging 4.4% to $64.16, a weekly gain of around 11.6%. Together, gold and silver added roughly $2.2 trillion in combined market capitalization this week. Despite the strong move, this gold price surge remains a recovery rather than a new high.