By: Economy Middle East

Gold prices rose for a fourth consecutive session on Thursday, reaching their highest level in seven weeks as a weaker U.S. dollar boosted demand and optimism over the reopening of the Strait of Hormuz further supported sentiment.

As of 6:07 GMT, spot gold gained 0.47 percent to $4,267.06 an ounce after touching its highest level since June 18 earlier in the session. Bullion had also recorded its strongest daily advance since February on Wednesday. Meanwhile, U.S. gold futures climbed 0.48 percent to $4,325.84.

In the UAE, gold rates eased AED0.25, with 24-carat gold falling to AED513.75 and 22-carat gold declining to AED475.75.

In addition, 21-carat gold eased to AED456 and 18-carat gold ticked down to AED391.

Meanwhile, 14-carat gold held steady at AED305.

Prospects of lower energy prices ease Fed rate hike bets

Gold prices remained supported after Iran and Oman reached an understanding on the geographic coordinates of a shipping route through the Strait of Hormuz, with a joint announcement expected once outstanding issues are resolved, provided there is no interference from third parties, Iranian Foreign Ministry spokesperson Esmaeil Baghaei said on Wednesday.

The prospect of lower energy prices has prompted investors to dial back expectations for further Federal Reserve tightening. Markets are now pricing in a 55 percent chance of a September rate hike, down from around 67 percent earlier this week.

Lower U.S. Treasury yields and a weaker dollar further supported gold prices, as a softer greenback makes dollar-denominated bullion more affordable for holders of other currencies.

Despite Thursday’s gains, spot gold has fallen 19 percent since the U.S.-Iran conflict began on February 28, as concerns that higher energy prices could fuel inflation and keep interest rates elevated weighed on the non-yielding metal. Gold typically performs better in a low interest-rate environment.

Investors eye U.S. jobs data

Despite the recent gains, investors remain cautious ahead of key U.S. labor market data that could provide fresh guidance on the Federal Reserve’s interest rate outlook.

The ADP National Employment Report showed private-sector hiring slowed in July, shifting the market’s focus to Friday’s closely watched nonfarm payrolls report for further clues on the central bank’s next policy move.

Other precious metals

As gold prices rallied, the precious metals market saw upward momentum. Spot silver slipped 0.1 percent to $62.02 an ounce, while platinum rose 1.2 percent to $1,755.18 after touching its highest level since June, and palladium gained 0.8 percent to $1,374.33, extending gains for a third straight session.