Gold Surges to Seven-Week High Amid Weakening Dollar and Treasury Yields

Gold prices rebounded to a seven-week high on Thursday, reaching $4,265.22 an ounce after a four-session advance. The metal's price surge was driven by weakening dollar and Treasury yields, which were pulled lower due to hopes of progress over the Strait of Hormuz.

The recent conflict between the US and Iran initially hurt bullion prices because disruption to energy supplies lifted oil prices, fuelled inflation concerns, and increased expectations that the Federal Reserve would raise interest rates. However, signs that Iran and Oman may reach an arrangement to restore shipping through the Strait of Hormuz have pushed crude lower and reduced fears of another energy-driven inflation shock.

Despite its four-day recovery, gold remains about 19% below its level when the US-Iran conflict began on February 28. The decline shows that geopolitical tension does not automatically help bullion when the market believes the inflation and interest-rate consequences will be more powerful than safe-haven buying.