Gold Hits Seven-Week High as Soft Dollar, Falling Oil Prices Spur Rally

Gold prices reached a seven-week high on Thursday, extending gains for a fourth consecutive session as a softer US dollar, declining oil prices, and easing Treasury yields boosted demand for the safe-haven metal.

Spot gold rose 1% to $4,285.84 per ounce, the highest level since June 18, according to the Times of India. On the Multi Commodity Exchange of India (MCX), gold futures also advanced. The MCX gold September contract climbed 1.54% to Rs 1,49,793 per 10 grams on Friday, August 7, while the October contract rose 0.44% to Rs 1,49,147 per 10 grams on Thursday, as reported by NDTV Profit and the Times of India, respectively.

In the domestic spot market, gold in Delhi jumped Rs 3,800 to Rs 1,53,800 per 10 grams on Thursday, the highest level since June 18, according to the Times of India.

Drivers of the Rally

Traders cited three primary catalysts: a weakening US dollar, lower crude oil prices, and growing expectations that the Strait of Hormuz shipping corridor will reopen after repeated disruptions.

The Bloomberg Dollar Spot Index remained slightly lower after a modest gain on Thursday, according to NDTV Profit. A weaker dollar makes gold priced in the US currency cheaper for buyers holding other currencies.

Brent crude dipped to $81.74 a barrel, while West Texas Intermediate traded around $76, according to the same source. Lower oil prices reduce overall inflation concerns, which can push the US Federal Reserve to keep interest rates low or cut them, making gold more attractive as it pays no interest.

“Both metals are on track for their strongest weekly performance since January, supported by softer crude oil prices and a weaker US dollar, as hopes of a shipping arrangement through the Strait of Hormuz eased concerns over supply disruptions,” said Kaynat Chainwala, AVP Commodity Research at Kotak Securities, as quoted by NDTV Profit. “This offset Thursday’s report that Iran’s parliament was reviewing restrictions on ‘hostile’ vessels transiting the waterway.”

US President Donald Trump on Thursday reiterated his belief that the war between the United States and Iran would conclude soon, according to NDTV Profit. Speaking to reporters in the Oval Office, Trump said, “I think the war is going to end soon, I don’t think they can go much longer.” His comments follow earlier remarks on August 5, when Trump said Iran was “moving along very nicely” and indicated that more clarity on the situation could emerge within 48 hours, as reported by NDTV Profit.

Domestic Factors and Silver Surge

In India, the Reserve Bank of India’s decision to keep the repo rate unchanged at 5.25% and its projection of inflation peaking in the October–December period may have kept traders favoring safe-haven assets, according to NDTV Profit. The Monetary Policy Committee noted that headline inflation has moved above target but remained in line with expectations.

Silver prices also rallied sharply. On MCX, the silver September futures contract surged 3.56% to Rs 2,33,876 per kilogram on Friday, August 7, while spot silver jumped 4.9% to $62.44 per ounce on Thursday, reaching its highest level since July 6, according to NDTV Profit and the Times of India. In Delhi, silver rose Rs 2,100 to Rs 2,34,800 per kilogram, the Times of India reported.

Platinum and palladium also extended gains for a third consecutive session, with platinum near its strongest since June 17 and palladium at its highest since June 2, according to the Times of India.

Market Outlook

Traders are now focused on Friday’s US nonfarm payrolls report, which could influence Federal Reserve rate expectations. According to NDTV Profit, citing CME FedWatch data, traders currently assign a 55% probability to a September rate move, down from 63% a week earlier.

“A softer payrolls outcome could reinforce expectations of a more patient Fed and provide further support to precious metals, while a strong reading may prompt profit-taking,” Chainwala added.

JP Morgan noted that ETF flows have become the key driver of gold prices after weaker demand from central banks and subdued physical buying, according to the Times of India. The bank observed that with official purchases slowing and retail demand remaining muted, rate-sensitive ETF inflows are increasingly influencing bullion’s direction.

Independent metals trader Tai Wong said that stronger gains across precious metals would likely require markets to begin pricing in interest rate cuts, adding that such expectations are unlikely to materialise before 2027, as reported by the Times of India.