Gold Steadies as Hormuz Deal Eyed

Gold steadied near $4,100 an ounce on Wednesday as investors remained cautious while assessing reports of an imminent deal to reopen the Strait of Hormuz, which could ease inflation concerns and lower the likelihood of near-term Federal Reserve interest rate hikes. On Tuesday, Qatar said an interim proposal had been prepared, while both Washington and Tehran signaled progress in negotiations to reopen Hormuz, triggering a sharp decline in oil prices. Markets trimmed expectations for a September Fed rate hike to around 57%, down from 67% a day earlier. Investors are now awaiting a fresh batch of US labor market data for further clues on the Fed’s policy outlook, with ADP’s July private payrolls report due later today. Meanwhile, gold-backed exchange-traded funds in China continued to attract inflows as institutional investors maintained support for bullion above the key $4,000-an-ounce level.

Gold rose to $4,080 per ounce on Tuesday as investors assessed diplomatic efforts to ease US-Iran tensions and their potential impact on oil prices, inflation, and the Federal Reserve's policy outlook. US Treasury Secretary Scott Bessent said a deal to reopen the Strait of Hormuz could be reached as soon as today or tomorrow, while Qatari Foreign Ministry spokesperson Majed al-Ansari said negotiations remain ongoing, with de-escalation and reopening the vital waterway as the top priorities. The developments prompted markets to lower expectations for a September Fed rate hike, with the implied probability falling to 57%. Investors now await upcoming US labor market data for further clues on the Fed's policy path. New York Fed President John Williams said inflation continues to trend gradually lower but reiterated that policymakers would not hesitate to raise rates if price pressures persist.

Gold traded around $4,050 an ounce on Tuesday, remaining within the $4,000–$4,100 range that has defined trading over the past several weeks, as investors continued to weigh uncertainty surrounding the Federal Reserve's interest rate outlook while monitoring developments in the Middle East for signs of progress toward a diplomatic resolution to the Iran conflict. New York Fed President John Williams said inflation still appears to be on a gradual path lower but stressed that the Fed would not hesitate to raise rates if price pressures persist. Meanwhile, the three policymakers who dissented from last week's decision to leave rates unchanged reiterated that additional tightening is warranted. Markets are currently pricing in a 63% probability of a September rate hike, with attention now turning to US labor market data. Elsewhere, conflicting signals from the US and Iran over negotiations to end the conflict added to uncertainty, helping support demand for safe-haven assets.