Gold Shines And Rises On Iran’s Deal Hopes, Lower U.S. Yields

Gold (XAU/USD) advances some 0.75% on Tuesday as Oil prices fall, along with US Treasury yields. Also, an improvement in risk appetite propelled the yellow metal to a two-day peak of $4,106.

XAU/USD advances as Hormuz reopening hopes weigh in Oil, ease inflation pressures

The US Dollar Index (DXY), which tracks the buck’s value against six other currencies, is down 0.05% amid growing speculation for a reopening of the Strait of Hormuz.

Recently, an Iranian Foreign Ministry spokesperson said that Iran and Oman continue talks on the Strait of Hormuz, as reported by IRIB. Tehran is reportedly weighing whether to allow Europe to clear mines in the Strait, while US President Donald Trump reposted an article from August 2, titled “Trump: Deal is imminent as Iran talks restart Monday on denuclearisation.”

In June, the US Job Openings and Labor Turnover Survey (JOLTS) declined from 7.537 million to 7.359 million, missing the forecast of 7.4 million. The low number of layoffs indicates minimal firing and hiring activity, with roughly one vacancy per unemployed person, signaling a balanced labor market.

The US Commerce Department reported that the trade deficit for June decreased from -$77.6 billion to -$73.3 billion, slightly higher than the estimate of -$73 billion.

Now eyes are on the ADP Employment Change for July, with private companies expected to have hired 70K people, down from the 98K jobs created in June. After this, the focus shifts to jobless claims on Thursday, followed by the release of Nonfarm Payrolls for July, with the US economy expected to add 80K workers to the workforce.

Worth noting, bullion prices are set to edge higher if crude prices continue to tumble. West Texas Intermediate (WTI), the US Oil benchmark, lost nearly 5% to $76.09 per barrel, pushing US yields lower, as markets expect lower inflationary prints. The US 10-year T-note collapses by 10 basis points to 4.687%, 

Money markets are pricing in a nearly 59% chance that the Federal Reserve (Fed) will raise rates at the September 16 meeting, according to Prime Terminal. For the December meeting, the odds for a rate hike are 83%.

Source: Prime Terminal

Aside from this, on Monday, the New York Fed President John Williams expressed optimism that inflation pressures are expected to decrease gradually. However, he emphasised that if inflation does not subside as hoped, the US central bank is prepared to respond with rate hikes.

XAU/USD technical outlook: Gold threatens to clear $4,100, despite remaining bearish

Gold price is consolidating but approaching $4,100 for the first time since last Friday. Momentum is turning bullish, as indicated by the Relative Strength Index (RSI), which is about to clear the 50-neutral level, a sign used by some traders to buy the yellow metal.

Despite this, the market structure is respecting the successive series of lower highs and lower lows, but if XAU/USD clears the 50-day Simple Moving Average (SMA) at $4,156, followed by the July 6 cycle high at $4,202, the yellow metal will shift to neutral-upward.

For a bearish continuation, Gold must extend its losses below the August 3 daily low of $4,019. A breach of the latter exposes $4,000, followed by the June 17 low of $3,959.

Gold daily chart