Gold reached a seven-week peak on Thursday, marking its fourth consecutive session of gains, as optimism regarding the re-opening of the Strait of Hormuz alleviated growing concerns about inflation and the persistence of elevated interest rates. Spot gold increased by 0.6% to $4,271.33 per ounce by 0843, following a peak that marked its highest level since June 18. On Wednesday, bullion experienced its most significant daily increase since February, rising to a peak of $4,267.24 per ounce. US gold futures increased by 0.6%, reaching a price of $4,330.20.

“Gold tries to hold onto its recent gains today amid growing optimism around the Strait of Hormuz. Hopes for a diplomatic breakthrough that restores oil flows are easing inflationary fears and paring back aggressive Fed tightening bets,” said Nikos Tzabouras. A proposed deal between Iran and Oman aimed at concluding five months of conflict between Iran and the United States would grant Tehran control over vessels entering the Gulf via the Strait of Hormuz, according to a senior Iranian source and two regional officials. Market expectations for a September US rate hike have diminished to 55% from 67% just two days prior. Gold is generally regarded as a safeguard against inflation; however, its attractiveness diminishes as a non-yielding asset in environments characterised by elevated interest rates.

Federal Reserve Bank of San Francisco President Mary Daly expressed her “complete support” for the decision made last week to maintain interest rates at their current level, as the central bank seeks to collect additional data to inform its response to inflation, which remains significantly above the 2% target. Investors are anticipating the release of the July US nonfarm payrolls report, which is set to be published on Friday. The ADP national employment report indicated a deceleration in the growth of US private payrolls during July.

“Gold remains vulnerable to renewed pressure and fresh 2026 lows. With lingering price pressures keeping rate-hike dissenters active and geopolitical risks ⁠finely balanced, any diplomatic setback could quickly resurrect those downside dynamics,” Tzabouras added. Among other metals, spot silver declined by 0.4% to $61.84. Platinum increased by 1.2% to $1,755.55, while palladium rose by 1% to $1,376.71, marking a third consecutive session of gains for both metals.