Gold prices rose for a fourth consecutive session on Thursday, touching their highest level in seven weeks as a weaker U.S. dollar and growing optimism over a potential reopening of the Strait of Hormuz boosted investor demand for the precious metal.
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Spot gold gained 0.2% to $4,254.98 per ounce, after earlier reaching its highest level since June 18. U.S. gold futures also rose 0.2% to $4,312.80 per ounce.
Tony Sycamore, a market analyst at IG, said the rally was driven by increasing optimism that diplomatic progress in the Middle East could ease regional tensions.
Lower geopolitical risks could keep pressure on oil prices and reduce the need for further interest rate hikes by central banks, providing additional support for gold.
The move followed reports from regional sources that a proposed agreement involving Iran and Oman could help bring an end to the conflict that began five months ago between Iran and the United States.
The proposal would reportedly give Tehran control over vessels entering the Gulf through the Strait of Hormuz.
Meanwhile, market expectations for a U.S. interest rate increase in September fell to 55%, down from 67% two days earlier.
The U.S. dollar index also came under pressure, making dollar-denominated commodities such as gold more attractive to holders of other currencies.
Investors are now awaiting the release of the U.S. nonfarm payrolls report for July on Friday after ADP data showed private-sector job growth slowed during the month.
Among other precious metals, silver slipped 0.5% to $61.78 per ounce, while platinum rose 0.8% to $1,755.18, its highest level since June. Palladium also gained 0.8% to $1,748.08, extending its rally for a third straight session.
