Gold prices pared earlier gains on Thursday but remained close to a seven-week high as growing optimism over a potential agreement to reopen the Strait of Hormuz continued to ease inflation concerns and reduce expectations of further monetary tightening by the Federal Reserve.
As of 11:57 WIB (04:57 GMT), spot gold (XAU/USD) rose 0.4% to $4,262.54 per ounce, while Gold Futures gained 0.4% to $4,321.65 per ounce. Meanwhile, silver (XAG/USD) climbed 0.2% to $62.17 per ounce, and platinum (XPT/USD) advanced 1.3% to $1,756.50 per ounce.
Gold Holds Firm Despite Profit-Taking as Hormuz Optimism Supports Sentiment
Gold continued to find support even as traders booked profits, following reports that progress toward a diplomatic agreement involving the Strait of Hormuz could reduce geopolitical risks and stabilize global energy markets.
According to Reuters, a draft agreement between Iran and Oman aimed at ending the five-month conflict between Tehran and Washington would grant Iran authority over vessels entering the Gulf through the Strait of Hormuz. The proposal has raised hopes that disruptions to global energy supplies could ease, helping to improve overall market sentiment.
Crude oil prices declined on expectations that the agreement could reduce tensions in the region and lower the risk of supply disruptions. Softer energy prices have also eased inflation expectations, prompting investors to scale back bets on additional interest rate hikes by the Federal Reserve.
Market pricing now indicates a 55% probability of a Fed rate hike in September, down from approximately 67% earlier this week, reflecting a notable shift in investor expectations.
At the same time, lower U.S. Treasury yields and a weaker U.S. Dollar Index continued to support bullion prices. Since gold does not generate interest, falling bond yields and a softer dollar increase its appeal by reducing the opportunity cost of holding the precious metal.
With geopolitical developments, Federal Reserve policy expectations, and U.S. macroeconomic data remaining in focus, gold prices are likely to stay sensitive to changes in market sentiment in the coming sessions.