Gold (XAU/USD) rallied for the second consecutive day, surpassing the $4,100 mark to reach a nearly two-week high during the Asian session on Wednesday, driven by optimism over a potential US-Iran deal and the reopening of the Strait of Hormuz, as well as receding US Federal Reserve rate-hike bets. This optimism led to US Dollar (USD) selling and benefited gold prices [1]. Similarly, silver (XAG/USD) traded 1.8% higher at around $60.95, revisiting its monthly high, as oil prices faced a sharp sell-off amid hopes for a resolution in the US-Iran conflict regarding the Strait of Hormuz, a critical chokepoint for global energy supply [2].
US Treasury Secretary Scott Bessent stated that the US could reach a deal with Iran to reopen the Strait of Hormuz by Wednesday, moving toward a more normalized position in the conflict. Axios reported that the US, Iran, and Oman are closing in on an interim agreement to reopen the strategic waterway [1]. However, financial markets remain uncertain about whether ongoing talks will restore freedom of navigation, with Iran confirming only that it is in talks with Oman over the charge of the Hormuz Strait [2].
The OPEC+ decision to increase production from September has helped ease supply concerns, dragging crude oil prices to a fresh low since June 13. As of Wednesday, WTI Oil traded 0.8% lower at around $73.80 [2]. Lower oil prices have anchored global inflation expectations, diminishing fears of interest rate hikes by central banks and supporting non-yielding assets like gold and silver [1][2].
Despite the positive momentum, traders are still pricing in a greater chance that the US Federal Reserve will raise borrowing costs by the end of the year, as the US labor market shows signs of improvement. The US Job Openings and Labor Turnover Survey (JOLTS) reported job openings at 7.36 million, above last year's levels, and Fed officials Jeff Schmid and Anna Paulson backed tighter monetary policy [1]. Deutsche Bank projects a modest pickup in US July payrolls, expecting employment growth of +65k, slightly above June’s +57k, with private payrolls also rising by +65k and an unemployment rate of 4.2% (with risks toward 4.3%) and average hourly earnings up 0.3% month-on-month [2].
Technical analysis shows gold breaking above the 200-period EMA on the 4-hour chart, with an RSI around 65 indicating firm bullish momentum [1]. Silver holds above the 20-period EMA at $59.05, with an RSI at 53.23 suggesting bullish momentum is building but not overstretched. Immediate support for silver is at the 20-day EMA ($59.05), and resistance is at the July 6 high ($63.28) [2].
CONCLUSION
Both gold and silver have surged on hopes of a US-Iran deal and lower oil prices, which have eased inflation concerns and reduced expectations for aggressive Fed rate hikes. Technical indicators for both metals point to continued bullish momentum, though upcoming US jobs data and developments in the Middle East remain key factors for market direction. The market impact is high, with traders closely watching for further diplomatic progress and economic data releases.