Spot gold price is nearing the $4,500 mark, a level last seen two months back, driven mainly by escalating geopolitical tension between the US and Iran.
As investors are concerned about the ongoing tension around the Strait of Hormuz, they are resorting to safe-haven investments, which is supporting the uptick in gold prices globally. Investors will also keep an eye on the upcoming US inflation data, which could influence expectations around next Federal Reserve interest-rate moves.
Hormuz Tensions Keep Safe-Haven Demand In Focus
Spot gold rose to $4,426.25 on Aug. 13, rising 0.27%, as per Investing.com. The yellow metal has gained over the past few sessions, advancing 1.05% on Aug. 12 and 1.04% on Aug. 10.
The recovery has brought gold closer to the $4,500 level after prices traded below $4,000 in mid-July. Spot gold had closed at $3,972.94 on July 16 before beginning its latest recovery.
Geopolitical uncertainty around the Strait of Hormuz has added to the backdrop for precious metals. Iran has been firm about the waterway not being reopened until their conditions are met by the US, which include lifting an American naval blockade, removal of sanctions, and compensation for the damages during the war.
With conflicting claims from Iran and the US over the status of the strait, investors remained cautious, which is in turn increasing the demand for the yellow metal.
US Inflation Data Next Key Trigger
Gold traders are also focused on the US consumer price index and producer price index data for July, due on Wednesday and Thursday, respectively.
The data comes after an unexpectedly weak US jobs report triggered a reassessment of Federal Reserve rate expectations. Markets are now looking for fresh clues on how the Fed will handle interest rates, with inflation readings likely to influence expectations.
Thus, geopolitical uncertainty, along with changing rate expectations, could keep gold prices volatile as the metal approaches the $4,500 level.
Also Read: Gold Jumps 1.5%, Silver Up 3% On Subdued US Inflation Reading: Further Upside? What Analysts Say
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