Driven by expectations of an Iran agreement and a decline in US Treasury yields, gold prices strengthen.

Spot gold rises: Expected reopening of navigation in the Strait of Hormuz caps oil prices and eases inflation pressure

According to the Islamic Republic of Iran Broadcasting, a spokesperson for Iran’s Foreign Ministry recently stated that Iran and Oman are still in negotiations regarding the Strait of Hormuz. Some reports indicate that Tehran is considering whether to allow European countries to conduct minesweeping operations in the Strait; US President Trump shared an article dated August 2 titled “Trump: US and Iran Resume Denuclearization Talks on Monday, Deal Nears.”

The US June Job Openings and Labor Turnover Survey (JOLTS) data decreased from 7.537 million to 7.359 million, below the market expectation of 7.4 million. Layoff levels remained low, indicating that both layoffs and hiring activity are subdued; the number of unemployed persons and job openings is roughly even, reflecting an overall balanced labor market.

According to the US Department of Commerce, the trade deficit narrowed from $77.6 billion in June to $73.3 billion, slightly above the expected $73 billion.

The market is currently focused on July's ADP private employment change data, which is expected to show an increase of 70,000 jobs, lower than June’s 98,000. Afterwards, focus will shift to Thursday’s initial jobless claims data, followed by July’s nonfarm payroll report, with the market predicting an addition of 80,000 jobs to the US economy.

Notably, if oil prices continue to tumble, gold prices are likely to rise further. US crude oil benchmark West Texas Intermediate (WTI) plunged nearly 5%, quoted at $76.09 per barrel; the market expects weaker inflation data, dragging down US Treasury yields. The US 10-year Treasury yield fell 10 basis points to 4.687%.

PrimeTerminal data shows that money market pricing reflects nearly a 59% probability that the Federal Reserve will raise rates at the September 16 meeting; the probability for a rate hike at the December meeting is 83%.

In addition, New York Fed President John Williams expressed optimism on Monday, believing that inflationary pressures will gradually recede. However, he also emphasized that if inflation does not cool as expected, the Fed is ready to respond with rate hikes.

Spot gold technical analysis: Overall still bearish, but gold prices may break above $4,100

Gold prices are in a consolidation phase, approaching the $4,100 level for the first time since last Friday. The Relative Strength Index (RSI) shows bullish momentum is building, with the indicator about to break above the neutral 50 line — a buy signal for some traders in gold.

To extend the bearish trend, gold prices need to break below the intraday low of $4,019 on August 3. If that level is breached, the next test will be the psychological $4,000 mark, followed by the June 17 low at $3,959.

Editor: Guo Jian