Gold rises above $4,250 on US–Iran deal hopes
- Gold price gains momentum to around $4,255 in Thursday’s early Asian session.
- Iran's Foreign Ministry said Iran and Oman agreed on the coordinates of the route through Hormuz.
- The US July employment report will take center stage later on Friday.
Gold price (XAU/USD) rises to near $4,255 during the early Asian session on Thursday. The precious metal extends the rally, marking its biggest daily jump since February, as optimism over a potential deal to reopen the Strait of Hormuz eases energy-driven inflation fears and reduces the odds of the Federal Reserve (Fed) raising interest rates.
Iran’s Foreign Ministry spokesperson Esmaeil Baghaei said on Wednesday that a deal with Oman on a route through the Strait of Hormuz is being “finalised”, but the US and Israel still pose a danger to ships in the vital waterway.
Meanwhile, US President Donald Trump claimed a deal could be reached on Wednesday, with continued diplomatic efforts potentially paving the way for US-Iran talks to resume. US Secretary of State Marco Rubio and Treasury Secretary Scott Bessent, both of whom said progress had been made in those talks.
Reports of a potential interim agreement to clear and reopen the critical water could ease inflation fears and reduce expectations for aggressive Fed interest rate hikes. This, in turn, could boost the yellow metal in the near term.
Traders will closely monitor the release of the US July employment report, which is due later on Friday. This report could offer some hints about the health of the labour market and US interest rate path. Economists expect Nonfarm Payrolls (NFP) to rise by 80,000 in July, while the Unemployment Rate is projected to remain steady at 4.2% during the same period. In case of stronger-than-expected outcomes, this could lift the Greenback and weigh on the USD-denominated commodity price.
Gold underpinned as easing oil prices pull US yields lower
Analysts at Commerzbank highlight that the latest leg of support for Gold came as “US Treasury yields fell across the curve as lower oil prices eased inflation concerns,” helping to reinforce the metal’s recovery alongside the broader risk-on tone.
Technical Analysis: Gold remains capped below the key 100-day SMA in daily chart
In the daily chart, XAU/USD has pushed back above the 20-day simple moving average (SMA) component of the Bollinger Bands, shifting the near-term tone to neutral with a slight bullish tilt, yet broader gains remain capped while price holds beneath the 100-day SMA resistance. The Bollinger upper band now aligns as immediate support after being reclaimed, while the Relative Strength Index (14) at 60.95 shows firm but not overextended upside momentum, hinting that buyers still have some room before facing overbought conditions.
On the topside, a sustained break above the 100-day SMA around $4,400 would be needed to expose higher bullish targets and signal a clearer continuation of the up-leg. On the downside, initial support is now seen around the recently reclaimed Bollinger upper band near $4,185, followed by the Bollinger middle band / 20-day SMA region around $4,070; a loss of this area would likely invite a deeper retreat toward the lower Bollinger band support near $3,950.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.