Gold Surges to Seven-Week High Amid US Labor Market Weakness and Mideast Diplomacy

Gold prices surged in European trading on Thursday, reaching their highest level in seven weeks as investors sought safe-haven assets amid growing optimism over a potential diplomatic breakthrough in the Middle East. The precious metal rose 1.35% to $4,304.20 per ounce, its highest level since June 18.

The gains were fueled by weak US labor market data, which reduced expectations that the Federal Reserve will raise interest rates in September. This development, combined with the prospect of a deal between the United States and Iran over the Strait of Hormuz, has investors reevaluating their risk appetite.

Ahead of Friday's July nonfarm payrolls report, markets are closely monitoring additional US economic data and comments from Federal Reserve officials to reassess expectations for the policy outlook. With the probability of a 25-basis-point rate hike falling from 57% to 53%, investors are increasingly turning to gold as a safe-haven asset.