Spot gold climbed to a seven-week high on Thursday, buoyed by reports that the Strait of Hormuz could reopen soon after US President Donald Trump vowed to finalize an agreement with Iran.
The precious metal opened higher in domestic markets, touching an intraday peak of ₹1,49,250 per 10 grams shortly after the opening bell, reflecting a sharp shift in sentiment toward risk-on positioning.
The move extends the recovery momentum seen earlier in the week, when gold rose more than 2% to a one-month high on similar geopolitical optimism.
The rally marks a notable reversal from the previous week, when gold had slipped to $3,974 amid rising Treasury yields and a hawkish Federal Reserve outlook. Investors are now pricing in a lower probability of imminent rate hikes, as the prospect of stabilized Middle East tensions reduces the inflationary premium on energy and shipping costs.
This dynamic has cooled the urgency for further monetary tightening, providing tailwinds for non-yielding assets like gold.
The move extends the recovery momentum seen earlier in the week, when gold rose more than 2% to a one-month high on similar geopolitical optimism. The convergence of easing regional risks and softer macroeconomic data has created a supportive environment for the metal, countering the steep monthly decline that had put gold on track for its worst quarterly drop since 2013.
Market participants will now focus on the durability of the US-Iran diplomatic progress and any subsequent signals from the Federal Reserve regarding the interest rate path.
A confirmed reopening of the Strait of Hormuz would likely further dampen oil price volatility, reinforcing the case for a more dovish Fed stance in the coming months.