Gold climbed to a two-week high on Wednesday as bargain hunters returned after last week’s sell-off and investors weighed widening Middle East risks against tentative diplomatic efforts.
Spot bullion rose 1.6% to $4,139.64 an ounce by 0307 GMT, after touching its strongest level since July 7.
August futures gained 1.7% to $4,144.20. The move pushed gold decisively back above $4,100, extending its recovery from the psychologically important $4,000 area.
Silver, platinum and palladium also advanced, pointing to broader buying across precious metals rather than an isolated haven move.
Gold’s latest rise has been driven partly by investors rebuilding positions after its steepest weekly loss since early June.
KCM Trade strategist Tim Waterer said buyers were treating the recent pullback as a value opportunity, while tentative diplomatic progress between Washington and Tehran was helping to cool the market’s worst inflation fears.
The break above $4,100 is important because that level had repeatedly capped earlier recovery attempts.
XS.com strategists sees the broader setup remaining constructive while bullion holds above $4,000.
A sustained close over the latest resistance zone would strengthen the case for another push higher, while a reversal below $4,100 would suggest the move was largely driven by short covering.
The geopolitical backdrop remains supportive. Three tankers carrying Saudi crude to Asian buyers reversed course in the Red Sea after Yemen’s Iran-aligned Houthis threatened vessels using Saudi ports.
The warning raises the prospect of disruption around Bab el-Mandeb while shipping through the Strait of Hormuz is already under pressure.
That creates a difficult but ultimately supportive mix for gold. Threats to two major energy chokepoints encourage haven demand, even as higher oil prices can revive inflation and lift bond yields.
The US military also completed an eleventh night of strikes on Iran, showing that diplomacy has yet to slow the fighting materially.
Pakistan and Qatar are continuing mediation efforts, while Iranian officials have discussed a proposed 10-day ceasefire.
Markets have repeatedly seen negotiation hopes fade, however, leaving bullion sensitive to each change in shipping flows and military activity.
The Federal Reserve’s July 28-29 meeting is the next major test. Investors will focus on whether Chair Kevin Warsh treats the oil shock as temporary or as a reason to maintain a tighter policy stance.
Long-term Treasury yields remain elevated, with the 30-year yield near 5.13%, preserving a significant opportunity-cost headwind for non-yielding gold.
Bullion may therefore need either softer yields or clearer diplomatic progress to extend its breakout.
Silver rose 1.9% to $59.87 an ounce, platinum gained 2.4% to $1,667.22 and palladium climbed 3% to $1,320.75.