Gold Extends Gains as Hormuz Tensions Offset Fed Policy Concerns

At 01:04 ET (05:04 GMT), spot gold (XAU/USD) rose 0.6% to $4,264.22 an ounce, while Gold Futures gained 0.6% to $4,323.07. Silver (XAG/USD) advanced 1.2% to $62.26 an ounce, and platinum (XPT/USD) climbed 0.6% to $1,740.05.

Geopolitical Tensions Around Hormuz Support Bullion

Iranian media reported that Tehran had struck what it called “hostile targets” in the Strait of Hormuz and planned to bar U.S. and Israeli vessels from using the strategic waterway. This followed comments from Iranian officials that an agreement with Oman to reopen shipping lanes was in its final stages.

Separately, Yemen’s Houthi movement claimed responsibility for a large-scale attack against Saudi-backed government forces, heightening concerns that the conflict could widen across the region. Despite these developments, U.S. President Donald Trump stated he believed the war would end “pretty soon” and said the United States remained in control of the Strait of Hormuz.

Gold briefly moved above $4,300 an ounce on Thursday as optimism over a potential Hormuz agreement prompted buying. That rally later faded as renewed escalation raised concerns that higher energy prices could keep inflation elevated and reinforce the case for tighter Federal Reserve policy.

Market Focus on Fed Outlook and U.S. Payrolls

Market pricing now reflects roughly a 60% probability of a Federal Reserve rate hike in September, after the Financial Times reported that Fed Chair Kevin Warsh is prepared to raise borrowing costs if inflation remains elevated in the coming weeks. The U.S. Dollar Index hovered around the 100 level, providing limited direction for precious metals.

St. Louis Federal Reserve President Alberto Musalem emphasized that policymakers cannot afford to tolerate persistently high inflation while waiting for potential productivity gains to ease price pressures. Investors are now looking to Friday’s U.S. nonfarm payrolls report as a key indicator for the Fed’s policy path.

Chinese investment demand also continued to underpin gold. Gold-backed exchange-traded funds in China recorded 14 consecutive sessions of inflows, helping stabilize prices despite broader macroeconomic headwinds.

Tony Sycamore, senior market analyst at IG, said the latest breakout suggests gold may have confirmed a bottom near the late-June low around $3,942, after earlier price action had cast doubt on that view. He noted that holding above that support would bolster prospects for an extension of the rally toward the 200-day moving average near $4,489. A sustained break above that level could open the way for a broader recovery toward the $5,000 mark. Sycamore added that the durability of the current advance will likely hinge on the outcome of the U.S. nonfarm payrolls report.

FAQ

Why are gold prices rising now?
Gold prices are rising as investors weigh escalating tensions around the Strait of Hormuz, ongoing inflation concerns, and expectations for the Federal Reserve’s next policy move, with additional support from continued Chinese investment demand.

What are current gold and silver price levels?
At 01:04 ET (05:04 GMT) on Friday, spot gold traded at $4,264.22 an ounce, Gold Futures at $4,323.07, while silver stood at $62.26 an ounce and platinum at $1,740.05.

How is the Federal Reserve outlook affecting gold?
Markets assign about a 60% probability of a September rate hike, following signals that Fed Chair Kevin Warsh is willing to raise rates if inflation stays elevated, and comments from St. Louis Fed President Alberto Musalem against tolerating high inflation, both of which influence gold through interest rate expectations.

What technical levels are analysts watching for gold?
According to Tony Sycamore of IG, the late-June low near $3,942 is viewed as a key support level, with potential upside targets at the 200-day moving average around $4,489 and, on a sustained break higher, toward the $5,000 mark.