Gold rebounds fast, but one technical wall still blocks the road to $5,000

Gold climbed to a seven-week high on Thursday, extending a four-session advance as hopes of progress over the Strait of Hormuz weakened the dollar, pulled Treasury yields lower and revived demand for bullion.

Spot gold rose 0.5% to $4,265.22 an ounce by 3.30 am GMT after touching its highest level since June 18.

US gold futures gained 0.5% to $4,324.60. Wednesday’s 4.4% surge was the metal’s strongest daily performance since February, underlining how quickly rate expectations have replaced conventional haven demand as the market’s main driver.

Hormuz hopes reverse gold’s wartime logic

Gold’s latest rally reflects an unusual feature of the Middle East conflict.

The fighting initially hurt bullion because disruption to energy supplies lifted oil prices, fuelled inflation concerns and increased expectations that the Federal Reserve would raise interest rates.

That chain is now moving in reverse.

Signs that Iran and Oman may reach an arrangement to restore shipping through the Strait of Hormuz have pushed crude lower and reduced fears of another energy-driven inflation shock.

A weaker inflation outlook has supported bonds, reduced the dollar’s appeal and lowered the opportunity cost of owning gold, which pays no interest.

The diplomatic path remains uncertain.

A proposed temporary arrangement would reorganise inbound and outbound shipping through Iranian and Omani waters, while mine-clearing and security measures would take time.

US maritime authorities continue to classify the threat to commercial vessels in the Gulf and the strait as high.

Despite its four-day recovery, gold remains about 19% below its level when the US-Iran conflict began on February 28.

The decline shows that geopolitical tension does not automatically help bullion when the market believes the inflation and interest-rate consequences will be more powerful than safe-haven buying.

Softer hiring data changes the rate debate

The dollar and Treasury yields weakened further after ADP reported that US private employers added 44,000 jobs in July, down from a revised 95,000 in June and below the 75,000 increase expected by economists.

The report added to evidence that hiring is cooling, although annual pay growth remained firm at 4.4%.

Traders reduced the probability of a quarter-point Federal Reserve rate increase in September to roughly 55%, from about 67% earlier in the week.

Attention now turns to Friday’s official US employment report. Economists expect nonfarm payrolls to rise by about 83,000 after a 57,000 increase in June, with unemployment holding at 4.2%.

A weaker result could extend gold’s rebound by pulling yields and the dollar lower, while a stronger report would risk reviving rate-rise expectations.

The $5,000 target still faces a major barrier

The rally has improved gold’s short-term technical picture, but the metal has not yet cleared the level needed to confirm a broader recovery.

IG market analyst Tony Sycamore views the 200-day moving average as the important test. Recent technical analysis placed the indicator near $4,490, well above Thursday’s spot price.

A sustained break through that area could strengthen momentum and reopen a path towards $5,000.

Until then, the latest advance remains a rebound within a much larger correction from January’s record high.

Elsewhere, silver slipped 0.1% to $62.02 an ounce. Platinum rose 1.2% to $1,755.18 after reaching its highest level since June, while palladium gained 0.8% for a third consecutive session.