Gold Hovers Near Seven-Week High Amid Easing Inflation Fears

Gold prices hovered near their seven-week high on Thursday, extending gains into a fourth consecutive session. The metal's value has been rising amid easing concerns about inflation and higher interest rates.

The Strait of Hormuz situation has seen hopes for a diplomatic breakthrough boost optimism around oil flows, which is paring back aggressive Fed tightening bets. Market expectations for a September US rate hike have eased to 55 per cent from 67 per cent just two days earlier.

While gold typically acts as a hedge against inflation, it loses its appeal in high-interest-rate environments. Federal Reserve Bank of San Francisco President Mary Daly expressed her support for the decision to hold interest rates steady last week, citing the need for more data on how to respond to inflation above its two per cent target.

Gold remains vulnerable to pressure and potential fresh lows if diplomatic setbacks occur. The metal's price has been sensitive to geopolitical risks, which remain finely balanced.