Key facts
- Spot gold climbed past $4,326 on Friday, its highest level in seven weeks.
- The surge was driven by cooling inflation fears linked to US-Iran peace talks and a drop in September Fed rate hike odds.
- Crude oil prices fell approximately 10% on the week due to progress in US-Iran talks regarding the Strait of Hormuz.
- The probability of a September Fed rate hike decreased to about 55% from 67%.
- Silver also rose, gaining 4.4% to $64.16, contributing to a combined market capitalization increase of roughly $2.2 trillion for gold and silver.
- China's central bank continued to add to its gold reserves in July, marking the fifth consecutive month of purchases.
Gold prices surged significantly this week, climbing past $4,326 and marking a seven-week high, with a weekly gain exceeding 6.6%. This rally is attributed to cooling inflation fears stemming from progress in US-Iran peace talks and a notable decrease in the probability of a September Federal Reserve rate hike. Crude oil prices fell about 10% on the week as a result of the diplomatic developments concerning the Strait of Hormuz, which in turn eased near-term inflation pressures. Consequently, the CME FedWatch-implied probability of a September rate hike dropped to approximately 55% from 67% the previous week.
Analysts describe gold's current movement not as a classic fear-driven safe-haven bid, but as a 'lower-real-rates trade,' directly linked to evolving Federal Reserve policy expectations. Silver also experienced a substantial increase, rising 4.4% to $64.16, contributing to a combined market capitalization gain of roughly $2.2 trillion for both precious metals this week. Despite the strong rebound, gold remains about 23% below its January 2026 peak, and silver is approximately 47% below its record high, indicating a restoration of lost value rather than new historical highs.
Technically, gold has broken above its 50-day moving average, now acting as support near $4,151, with the next resistance level at the 100-day moving average around $4,389. A sustained close above this level, potentially supported by constructive nonfarm payrolls data, could signal further gains. China's central bank has been a consistent buyer, adding to its gold reserves for a fifth straight month in July, reinforcing the structural demand for the metal. The potential for a stronger-than-expected jobs report could re-price Fed hike odds higher and test the current rally, according to Han Tan, chief market analyst at Bybit. Furthermore, Kalshi's filing to launch metals futures indicates broadening institutional interest in precious metals.