Gold hits 7-week high on weak US payrolls data, Hormuz deal hopes

Gold prices climbed to their highest level since late June on Thursday, supported by weaker-than-expected US private payrolls data, a softer dollar and hopes for an agreement to reopen the Strait of Hormuz.

Spot gold rose as high as around $4,300 per ounce before paring some gains to trade around $4,260, extending its advance for a fourth consecutive session.

The precious metal gained after payroll processing firm ADP reported a sharp slowdown in private-sector hiring in July, with most job creation concentrated in the healthcare sector.

The weaker labor market data reduced expectations that the US Federal Reserve will raise interest rates in September, supporting non-yielding assets such as gold.

Gold was also buoyed by weakness in the US dollar, with the dollar index hovering near a two-month low of 99.66.

The greenback came under pressure following joint US-Japan intervention to strengthen the yen last week. Reports suggested that Japan sold nearly $60 billion in US Treasury securities to finance the operation, while US purchases of yen were funded through euro sales.

Optimism over a possible reopening of the Strait of Hormuz provided further support to the precious metal.

Iran said Wednesday that an agreement with Oman to reopen the critical waterway was close, raising hopes of easing tensions in the Middle East and reducing inflationary pressure from elevated energy prices.

Despite its recent recovery, gold remains more than 20% below its record high of $5,589 per ounce, reached in late January.