HG MARKETS: 

Gold climbed to a one-month high on Wednesday as growing optimism over the reopening of the Strait of Hormuz pushed oil prices lower. At the time of reporting, XAU/USD was trading around $4,155, gaining nearly 1.90% on the day. The move showed that investors were reacting positively to signs of easing geopolitical risk and softer energy prices.

The latest support for gold came after U.S. President Donald Trump said Washington had held “very good discussions” with Iran during day-long negotiations on Tuesday. He also suggested that the Strait of Hormuz could reopen very soon. Since Hormuz is a key route for global oil shipments, any progress toward reopening the passage can reduce supply fears and bring oil prices down.

However, despite improved market sentiment, the U.S. Dollar showed only limited weakness. Traders are still waiting for clear confirmation that shipping through the Strait will actually resume. The U.S. Dollar Index, which measures the dollar against six major currencies, remained almost flat near 99.85, suggesting that investors are not fully pricing in a major shift yet.

U.S. Treasury yields have also eased from recent highs, but they remain relatively elevated. This is because broader inflation concerns are still keeping expectations alive that the Federal Reserve may keep interest rates higher for a longer period. Higher yields and hawkish Fed expectations can limit gold’s upside because gold does not provide interest income.

For gold to extend its rally further, oil prices may need to fall more clearly, as lower oil prices would reduce inflation pressure and weaken the case for additional Fed tightening. Traders are now focusing on upcoming U.S. labor market data, including the ADP Employment Change report and Friday’s Nonfarm Payrolls report, for fresh signals about the Fed’s next policy direction.