TLDR
- Gold is trading near a seven-week high, with spot gold at $4,270.29 and futures at $4,329.15 per ounce
- Optimism over a potential Strait of Hormuz deal between Iran and Oman is easing inflation fears
- Oil prices have fallen more than 9% over the past week, reducing pressure on the Fed to raise rates
- Markets now price a 43% chance the Fed holds rates steady in September, up from 37% a week ago
- A weaker US dollar is making gold cheaper for overseas buyers, adding further support
Gold is holding near its highest level in seven weeks as hopes grow that a deal to reopen the Strait of Hormuz could lower oil prices and reduce pressure on the Federal Reserve to raise interest rates.
Spot gold rose 0.6% to $4,270.29 an ounce on Thursday. Gold futures climbed 0.5% to $4,329.15 an ounce.
New York gold futures were also up 0.2% to $4,314 a troy ounce in early trading, putting the metal up nearly 4% for the week.
Hormuz Deal Optimism Eases Inflation Fears
Reports suggest a proposed agreement between Iran and Oman would give Iran control over vessels entering the Gulf through the Strait of Hormuz. US officials have said this week that a deal could be close.
Iran and Oman are close to finalizing a deal on shipping through the Strait of Hormuz, according to officials, as both Iran and the U.S. signaled a deal would be announced soon.
Shipping through the strait will face “no fees or tolls” under a temporary deal agreed between Iran… pic.twitter.com/pet8DJwDUu
— CNBC (@CNBC) August 6, 2026
Some analysts are cautious, pointing to a recent pattern of threats and pullbacks in the region. But the prospect of smoother energy flows has already pushed oil prices lower.
Oil has dropped more than 9% over the past week. Brent crude is trading below $80 a barrel.
Lower energy prices tend to reduce inflation expectations, which in turn lowers the case for interest rate hikes. Higher rates are generally negative for gold because they increase the appeal of yield-bearing assets.
ING analysts said in a note that “lower oil prices, a weaker dollar and potentially a more dovish-than-expected rates environment should remain supportive for bullion.”
Fed Rate Expectations Shift
Markets are now pricing roughly a 43% probability that the Fed will keep rates steady at its September meeting. That is up from about 37% just a week ago, according to CME FedWatch data.
ING added that “expectations for Federal Reserve tightening have eased, improving the outlook for non-yielding assets such as gold.”
A softer US dollar is also helping gold. When the dollar weakens, gold becomes cheaper for buyers using other currencies, which can boost demand.
Investors are now watching Friday’s nonfarm payrolls report closely for clues on where Fed policy is headed.
On Wednesday, the ADP National Employment Report showed private-sector hiring slowed in July. That data added to the case for the Fed to pause rate hikes.
The jobs report on Friday is expected to give a clearer picture of the US labor market and could move both gold prices and rate expectations.
Gold is up nearly 4% this week, with traders watching both the Middle East situation and US economic data for direction.
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