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Gold holds near $4,270 as Strait of Hormuz deal hopes lift bullion
Gold is up 0.5% on the day near $4,270, after rising more than 4% Wednesday to a seven-week high as traders awaited an Iran-Oman shipping-route update.
Gold prices are consolidating after a sharp move higher, with XAU/USD trading around $4,270, up 0.53% on the day, as the US dollar steadies and markets wait for confirmation of a possible Iran-Oman agreement tied to the Strait of Hormuz, FXStreet reports.
The outlet says gold jumped a little over 4% on Wednesday to its highest level in seven weeks after Iran said it reached an understanding with Oman on a proposed shipping route, with a joint statement still being drafted. With oil pressured by the prospect of reduced risk, the supportive backdrop has helped bullion, although geopolitical risk in the Middle East remains.
FXStreet links the backdrop to rate expectations and inflation concerns, noting that a sustained decline in energy prices could ease inflation worries and reduce pressure on the Federal Reserve to raise rates, even as inflation above the Fed’s 2% target keeps tighter policy expectations alive.
Traders are also looking ahead to Friday’s US Nonfarm Payrolls, with FXStreet citing TD Securities that recent ADP employment data came in softer than expected and suggesting a similar pattern may show up in NFP job gains. According to the CME FedWatch Tool, the market-implied chance of a 25-basis-point September hike has eased to 52.9% from 63.4% a week earlier.
Latest closeGold $4,308.50 ▲5.2%