Gold rises 0.6% to $4,264 as Strait of Hormuz tensions offset Fed rate-hike bets, with U.S. payrolls data due Friday.
Gold extended overnight gains Friday as investors weighed escalating tensions around the Strait of Hormuz against expectations for the Federal Reserve’s next policy move, with markets now awaiting key U.S. payrolls data for fresh direction. XAU/USD rose 0.6% to $4,264.22 an ounce at 01:04 ET, while Gold Futures gained 0.6% to $4,323.07. Silver, tracked via XAG/USD, climbed 1.2% to $62.26 an ounce, and XPT/USD added 0.6% to reach $1,740.05.
Source: investing.com
Hormuz Tensions Keep Fed Concerns in Focus
Iranian media reported that Tehran struck what it described as “hostile targets” in the Strait of Hormuz and announced plans to bar U.S. and Israeli vessels from transiting the strategic waterway, a development that came just as Iranian officials said a separate agreement with Oman to reopen shipping lanes was nearing completion. Adding to regional uncertainty, Yemen’s Houthi movement claimed responsibility for a large-scale attack against Saudi-backed government forces, raising fears the conflict could widen further. Despite the flare-up, U.S. President Donald Trump said he expected the conflict to end “pretty soon” and maintained that the United States remained in control of the strait.
Gold briefly topped $4,300 on Thursday as optimism around a potential Hormuz agreement drove buying, but that rally faded once renewed escalation revived concerns that higher energy prices could keep inflation elevated, strengthening the case for tighter Fed policy. Markets now assign roughly a 60% probability to a September rate hike after the Financial Times reported that Fed Chair Kevin Warsh is prepared to raise borrowing costs if inflation stays elevated in the coming weeks. The US Dollar Index held near the 100 level, offering little fresh direction for bullion.
Payrolls, Fed Commentary, and Chinese Demand in Focus
Investors are now turning to Friday’s U.S. nonfarm payrolls report, widely seen as the next major test for the Fed’s policy trajectory. St. Louis Fed President Alberto Musalem said policymakers cannot afford to tolerate persistently high inflation while waiting for stronger productivity growth to potentially ease price pressures on its own.
Source: tradingeconomics.com
- Chinese gold-backed ETFs have recorded 14 consecutive sessions of inflows
- Gold may have confirmed a bottom near the late-June low of $3,942
- A sustained break above the 200-day moving average near $4,489 could open the path toward $5,000
Tony Sycamore, senior market analyst at IG, said the latest breakout suggests gold may have confirmed a bottom near that late-June low, reversing earlier doubts about the level’s durability. He noted that holding above that support would strengthen the case for the rally extending toward the 200-day moving average near $4,489, with a sustained break above that threshold potentially clearing the way for a broader move toward $5,000. Sycamore added that Friday’s payrolls report will likely determine whether the current breakout develops into a lasting advance or loses steam in the near term.
Conclusion
Gold prices remain supported by heightened geopolitical tensions in the Middle East and steady demand from Chinese gold-backed ETFs, but the market’s next major move will likely depend on the upcoming U.S. nonfarm payrolls report and evolving Federal Reserve policy expectations. While technical indicators suggest XAU/USD may have established a medium-term bottom, stronger-than-expected economic data or persistent inflation could reinforce expectations for tighter monetary policy and limit further gains. Traders will closely monitor both macroeconomic developments and geopolitical headlines for fresh direction in the precious metals market.