Gold prices moved higher on Friday, building on the previous session’s gains as investors weighed escalating geopolitical tensions around the Strait of Hormuz against expectations for US monetary policy. Markets are now looking to the upcoming US nonfarm payrolls report for further guidance.
At 01:04 ET (05:04 GMT), spot gold (XAU/USD) was up 0.6% at $4,264.22 an ounce, while gold futures gained 0.6% to $4,323.07. Silver (XAG/USD) rose 1.2% to $62.26 an ounce, and platinum (XPT/USD) advanced 0.6% to $1,740.05.
Hormuz Developments Keep Inflation and Fed Outlook in Focus
Iranian media reported that Tehran had launched strikes against what it described as “hostile targets” in the Strait of Hormuz and intended to prevent US and Israeli vessels from using the strategic shipping route.
The reports followed comments from Iranian officials indicating that negotiations with Oman over reopening the waterway were nearing completion.
Separately, Yemen’s Houthi movement claimed responsibility for a major attack on Saudi-backed government forces, raising concerns that instability could spread further across the region.
Despite the renewed tensions, US President Donald Trump said he believed the conflict would end “pretty soon” and insisted that the United States remained in control of the Strait of Hormuz.
Gold briefly traded above $4,300 on Thursday as hopes for a shipping agreement boosted buying interest. However, prices later retreated as renewed geopolitical risks fuelled concerns that higher oil prices could keep inflation elevated and encourage tighter Federal Reserve policy.
Markets are currently pricing in around a 60% probability of a Federal Reserve interest rate increase in September after the Financial Times reported that Federal Reserve Chair Kevin Warsh is prepared to tighten monetary policy further if inflation remains stubbornly high.
Meanwhile, the US Dollar Index remained close to the 100 mark, providing little additional direction for precious metals.
Payroll Data and Chinese Demand Could Shape Gold’s Next Move
Attention now turns to Friday’s US nonfarm payrolls report, which is expected to play a significant role in shaping expectations for future Federal Reserve policy.
St. Louis Federal Reserve President Alberto Musalem said policymakers cannot afford to tolerate persistently high inflation while waiting for stronger productivity growth to ease price pressures.
Gold has also continued to benefit from robust demand in China, where gold-backed exchange-traded funds have recorded 14 consecutive sessions of net inflows, helping to support prices despite broader macroeconomic uncertainty.
Tony Sycamore, Senior Market Analyst at IG, said recent price action suggests gold may have established a floor near the late-June low around $3,942.
He added that maintaining prices above that level would support a move toward the 200-day moving average near $4,489, while a sustained break above that resistance could open the way for a broader advance towards $5,000.
According to Sycamore, Friday’s US payrolls report is likely to determine whether the latest rally develops into a sustained upward trend or loses momentum.