Gold Surges to Two-Month High Before Oil Price Spike Reverses Rally

Gold prices surged to their highest level in nearly two months on Tuesday, but quickly retreated after oil prices spiked due to escalating tensions at the Strait of Hormuz. The Comex December gold contract touched $4,495.00 an ounce, a 1.7% gain and its highest since mid-June.

The price pullback came as US crude oil traded above $83 a barrel and Brent pushed towards $89 after Pakistan signaled a possible agreement to ease tensions in the region. This development could reduce pressure on the Federal Reserve to raise interest rates, which is supportive of gold prices.

Ole Hansen, head of commodity strategy at Saxo Bank, noted that gold needs to hold between $4,360 and $4,370 an ounce for its recent rally to continue, otherwise some consolidation can be expected. Spot gold is currently sitting just above this band.