Gold heads for biggest weekly gain since January ahead of US jobs data

Gold prices rose in European trading on Friday, resuming gains after a brief pause in the previous session and approaching a seven-week high, putting the precious metal on track for its strongest weekly advance since January amid a sharp improvement in investment demand.

Markets are awaiting further details on negotiations between the United States and Iran, mediated by Oman, aimed at reaching an agreement to reopen the Strait of Hormuz to international shipping.

Weak US labor market data have reduced expectations that the Federal Reserve will raise interest rates in September, with investors now awaiting the July employment report due later today.

The Price

• Gold prices today: Gold rose 0.95% to $4,280.60 an ounce, from the opening level of $4,240.22, after recording a low of $4,229.74.

• At Thursday's settlement, gold slipped around 0.1%, marking its first loss in four sessions as correction and profit-taking emerged after prices earlier reached a seven-week high of $4,304.20 an ounce.

Weekly trading

So far this week, which officially concludes with Friday's settlement, gold prices are up around 6.0%, on track for their second weekly gain in three weeks and their strongest weekly advance since January.

Hormuz negotiations

• Diplomatic sources said Iran and Oman are close to announcing a temporary agreement regulating and reopening inbound and outbound shipping routes through the Strait of Hormuz.

• Tehran is demanding an end to the US naval blockade of its ports, the removal of recent oil sanctions, and the release of frozen Iranian assets as conditions for reopening the strait.

• Iran's parliament has begun reviewing legislation that would prohibit vessels from certain countries, including the United States and Israel, from passing through the strait, while imposing fees and penalties on some ships using the waterway.

• The White House rejects granting Iran the authority to impose mandatory transit fees on commercial vessels or establish a new security framework that could affect international freedom of navigation.

• Oman continues efforts to bridge differences between Washington and Tehran, with reports indicating that proposals have been exchanged regarding the regulation of international shipping.

• President Donald Trump said he believes the war will end very soon, describing the negotiations as a final opportunity for diplomacy.

• Iran's chief negotiator accused Trump of "show diplomacy" as traffic through the Strait of Hormuz remains almost completely halted.

• The Houthis announced new attacks, renewing concerns that further escalation could complicate negotiations and increase security risks across the region.

US interest rates

• ADP reported on Wednesday that hiring by US private-sector companies slowed significantly in July and came in below market expectations.

• Following the data, according to the CME FedWatch Tool, market pricing for the Federal Reserve to leave interest rates unchanged in September increased from 43% to 47%, while the probability of a 25-basis-point rate hike fell from 57% to 53%.

• The probability of the Federal Reserve leaving rates unchanged in December increased from 17% to 19%, while expectations for a 25-basis-point rate hike declined from 83% to 81%.

US jobs report

Markets are awaiting the US monthly employment report later today to reassess those expectations. The report will include key indicators on the US labor market, particularly nonfarm payrolls for July, alongside the unemployment rate and average hourly earnings.

The data are due at 12:30 GMT, with forecasts pointing to the US economy adding 85,000 jobs in July, up from 57,000 in June. The unemployment rate is expected to remain unchanged at 4.2%, while average hourly earnings are forecast to rise 0.3%, matching the previous month's increase.

Gold outlook

We expect that weaker-than-expected US employment data would further reduce expectations for higher US interest rates this year, potentially driving additional gains in gold and other precious metals.

Under such a scenario, gold could reach fresh two-month highs. A break above several key resistance levels and major moving averages could pave the way for further gains toward the $5,000-an-ounce threshold.

SPDR

Gold holdings at SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, increased by around 0.57 metric tons on Thursday, marking a third consecutive daily increase and lifting total holdings to 1,014.72 metric tons, the highest level since June 23.