Gold Hits Seven-Week High following Hormuz Reopening Hopes

By Staff, Agencies

Gold rose for a fourth straight session on Thursday, touching a seven-week high, supported by a weaker dollar, lower Treasury yields, and rising hopes that the Strait of Hormuz could reopen.

Spot gold gained 0.5% to $4,265.22 per ounce by 3:30 GMT [6:30 Al-Quds time], its highest since June 18, after Wednesday brought bullion's largest daily gain since February.

US gold futures rose 0.5% to $4324.60.

IG market analyst Tony Sycamore told Reuters that the rally reflects growing confidence that a regional diplomatic deal is close, which would ease oil price pressure and lower the odds of central bank rate hikes, in a scenario that benefits gold, since it pays no interest. A sustained move above the 200-day moving average, he said, could set up a stronger recovery toward $5000.

Markets are now pricing a 55% chance of a September US rate hike, down from 67% two days earlier, while the dollar index and 10-year Treasury yield both eased. Silver slipped 0.1% to $62.02, platinum gained 1.2% to $1755.18, and palladium rose 0.8% to $1374.33.

The rally follows reported progress in talks between Tehran and Muscat over navigation through the Strait of Hormuz. Iranian Deputy Foreign Minister Kazem Gharibabadi said on Wednesday that the two countries have reached preliminary understandings on nearly all points and are drafting a joint text with maps of new entry and exit routes.

The arrangement is temporary, expected to hold for two to four months or longer, with much of the route running through Iranian waters. Gharibabadi called it a departure from how the strait has been managed for six decades. Spokesperson Esmaeil Baghaei said the joint statement is being finalized, but noted the understanding alone cannot guarantee safe passage while US naval forces maintain pressure in the area.

A separate Iranian political-security source mentioned that talks with Oman have reached an advanced point. Iran is seeking a system to log every vessel entering and exiting the Strait of Hormuz, while Oman is still considering the proposal, the source said. This points to a jointly managed corridor, not the one-sided Iranian authority some Western reports have suggested.

Iran has drawn a line between this route agreement and a full reopening of the strait. Full reopening, Gharibabadi said, depends on Washington meeting its obligations under the Islamabad memorandum, including a 60-day period after signing in which Iran incurs no costs. He also denied that Iran is currently negotiating with the US, saying Tehran has only received messages signaling Washington's willingness to honor its commitments, with no decision yet on a second phase.

Gold's advance follows a sharp decline since the US war on Iran began on February 28, when spot prices fell roughly 19%. That drop happened largely because the war disrupted shipping through Hormuz, pushing up energy costs and inflation expectations.

Investors began pricing in higher, not lower, interest rates, which hurt gold since it earns no yield, even though wars typically drive investors toward it. The current rally works the opposite way, as shipping risk eases, so do inflation expectations and the odds of further rate hikes, making gold attractive again.

Separate from short-term market fluctuations, central banks continued to expand their gold reserves. According to the World Gold Council, central banks purchased a net 51 tons of gold in June, marking a third consecutive month of net buying and bringing first-half 2026 purchases to 102 tons. Poland and China led the buying, with China extending its streak of monthly reserve increases to 20 consecutive months. Uzbekistan, Kazakhstan, Jordan, the Czech Republic, Ghana, and Georgia also added to their gold holdings during the period.

Not every central bank is accumulating. Turkey was the largest net seller in H1, selling 83 tons mostly to support the lira, while Russia sold 44 tons.

The wider shift toward gold traces to 2022, when the US froze roughly $300 billion in Russian reserves, prompting other governments to reconsider large dollar holdings. China's Treasury holdings have since dropped from a $1.3 trillion peak to about $650 billion. Japan, the UK, and EU states remain the largest foreign holders of US debt.