Gold Surges As Trump Reassures On Chances Of An End To Strait Of Hormuz Crisis

(RTTNews) – Extending yesterday’s surge, gold prices have soared on Wednesday after U.S. President Donald Trump reassured that Iran would strike a deal with the U.S. and reopen the Strait of Hormuz soon. With supply concerns abating, crude oil prices slumped, reducing U.S. rate hike concerns due to oil-linked inflationary pressure.

Front Month Comex Gold for September month delivery has surged by $143.20 (or 3.49%) to $4,250.70 per troy ounce.

Front Month Comex Silver for September month delivery has also soared by $1.920 (or 3.19%) to $62.165 per troy ounce.

Despite Iran’s repeated denials, U.S. President Donald Trump and his team maintained that talks with Iran were going on. The negotiations are intended mainly to resolve disputes over control of the Strait of Hormuz and Iran’s nuclear programs.

While responding to Fox News, Trump clamed that the talks have been moving very nicely and said that all-day negotiations happened on Tuesday. Trump reassured that the Strait of Hormuz will reopen very soon.

While sounding optimistic about securing a deal on the one hand, Trump also kept tensions alive by threatening that if Iran backs out of an agreement, it will be struck very hard.

Trump repeated that Iran would not be allowed to have a nuclear weapon. However, not wanting to rush, Trump preferred to wait and see how things pan out.

Trump speculated a steep decline to crude oil and energy prices when the Strait of Hormuz is opened up fully.

Since last Friday, when Trump ordered U.S. forces to halt his earlier planned massive strikes on Iran to give diplomacy a chance, crude oil prices are moving downwards by losing the associated risk premium.

Yesterday, U.S. Treasury Secretary Scott Bessent stated that talks with Iran could end in a deal by possibly Wednesday (i.e., today).

Later, Qatar which is mediating between the U.S. and Iran (in coordination with Pakistan and Oman) and facilitating exchange of communications and draft proposals too confirmed very good progress in talks.

Yesterday, U.S. Central Command affirmed that the southern passage through the Strait of Hormuz is operational and accessible to all merchant vessels.

Today, citing two regional officials, The Associated Press reported that negotiators from Iran and Oman have finalized a draft deal to reopen the Strait of Hormuz and are awaiting approval from Iran’s supreme leader.

Reportedly, this deal is tied to the June 17 Memorandum of Understanding signed between the U.S. and Iran which became void after both nations re-started the exchange of attacks.

On the economic front, the U.S. Automatic Data Processing data revealed that private employers added 44,000 jobs in July, the least in six months, following a downwardly revised 95,000 gain in June and below forecasts of 70,000.

Due to easing of Hormuz tensions, crude oil prices lost nearly 10% in the past two days which has lowered inflationary concerns. Hence, analysts have lowered their forecasts of near-term high interest rate in the U.S.

WTI crude oil delivery for the month of September was last seen trading, down by $1.23 (or 1.62%) at $74.54 a barrel.

Last month-end, the U.S. Federal Reserve held interest rates without any change.

Investors are now awaiting the nonfarm payrolls for July set to be released this Friday to derive more clues on Fed’s policy trajectory.

Experts are of the view that despite the ups and downs in gold prices corresponding to the swift changes in the Middle East crisis, brisk buying by central banks is adding to the underlying strength of the yellow metal.

According to the World Gold Council, central banks bought 51 tonnes of gold in June with Poland and China leading the accumulation.

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