Gold Surges to Seven-Week High on Diplomatic Hopes

Gold prices surged to their highest level in seven weeks on Thursday, fueled by growing hopes of a diplomatic breakthrough in the Middle East. The precious metal touched $4,265.22 per ounce, up 0.5% from the previous day's close. This marks the fourth consecutive session of gains for gold.

The sharp rally is attributed to optimism that a deal between Iran and Oman will soon be finalized, which would reduce tensions in the region and ease pressure on oil prices. According to IG market analyst Tony Sycamore, this development could keep downside pressure on oil prices and reduce the need for central banks to raise interest rates, providing a clear tailwind for gold.

Spot gold has declined 19% since the onset of the U.S.-Iran conflict in February due to fears of energy-driven inflation pushing interest rates higher. However, with market expectations for a September U.S. rate hike easing to 55%, investors are becoming more optimistic about gold's prospects.