06.08.202609:16 Forex Analysis & Reviews: Gold Breaks $4300: Strongest Growth in Six Months on Hopes for Hormuz Deal

Today, gold has risen by 1 percent to $4,287.95, briefly gaining 1.3 percent and testing $4,300. This continues the largest increase in six months following a 4.1 percent jump in the previous session. Silver rose by 0.2 percent to $62.19 after soaring more than 4 percent the day before. Platinum and palladium also increased in price, while the dollar index fell by 0.1 percent.

The trigger for the rally was signs of progress in reopening the Strait of Hormuz, easing pressure on the Federal Reserve from the energy sector in favor of raising rates. Iran has announced an agreement with Oman on a proposed shipping route through the strait, increasing the likelihood of the resumption of some energy flows through this vital waterway. Against this backdrop, oil prices fell.

However, Iran itself quickly cooled the market's excessive optimism. Iran's Deputy Foreign Minister Kazem Gharibabadi told Iranian media that the route will be temporary and will remain in effect for "two to four months," adding, "this agreement does not mean a complete opening" of the strait.

President Trump confirmed that talks with Iran are ongoing, stating that he will "see what happens" and that he would prefer to strike a deal with the Islamic Republic rather than conclude the war militarily, previously allowing for the possibility of an agreement as early as Wednesday in US time.

A practical consequence of these signs of de-escalation has been a sharp easing of market expectations regarding the Fed's rate: markets are now fully pricing in only one rate hike by the end of the year compared to two just last week. A less aggressive monetary policy is generally favorable for non-yielding precious metals. The scale of gold's previous decline remains a significant context for the current rebound. Since the beginning of the US-Iran war in late February, the metal has fallen by nearly a fifth amid sharp rises in energy prices and heightened inflationary pressure.

The monetary backdrop remains ambiguous despite the easing of market expectations. On Wednesday, Fed Chair Lisa Cook reiterated her readiness to raise rates if inflation does not slow, warning that the central bank might not be able to afford the luxury of waiting before returning to the 2 percent target. San Francisco Fed President Mary Daly issued a similar warning.

Regarding the current technical picture of gold, buyers need to reclaim the nearest resistance at $4,304. This will allow a target of $4,372, above which it will be quite challenging to break through. The furthest target will be the $4,432 area. If gold falls, bears will attempt to take control of $4,249. If successful, breaking this range will deal a serious blow to the bulls' positions and may drive gold down to a low of $4,186, with a potential move toward $4,124.