Gold Hits Seven-Week High on Weaker Dollar, Oil Price Drop

Gold rallied to a seven-week high on Thursday, extending gains for a fourth consecutive session, as a softer US dollar and lower crude oil prices boosted demand for the safe-haven metal. The move came amid growing hopes for a reopening of the Strait of Hormuz and easing tensions between the United States and Iran.

Spot gold rose 1% to $4,285.84 per ounce by 0132 GMT on Thursday, its highest level since June 18, according to a live blog from The Times of India. On Wednesday, bullion recorded its biggest single-day gain since February. In the US, gold futures advanced 0.9% to $4,345.80. On the Multi Commodity Exchange of India (MCX), gold October futures rose 1.35% or Rs 2,000 to Rs 1,46,241 per 10 grams on August 5, as reported by NDTV Profit. By August 6, gold in Delhi jumped Rs 3,800 to Rs 1,53,800 per 10 grams, a seven-week high last seen on June 18 when it settled at Rs 1,53,440/10g, according to The Times of India.

The rally was driven by a combination of factors, with a weaker US dollar and lower Treasury yields making gold more attractive to holders of other currencies. The Bloomberg Dollar Spot Index remained slightly lower after gaining 0.2% on Thursday, NDTV Profit reported. The US dollar hovered near a six-week low against major currencies, while yields on benchmark 10-year US Treasury notes remained subdued, The Times of India noted.

Crude oil prices also played a key role. Brent crude dipped to $81.74 a barrel after rallying nearly 4% in the previous session, while West Texas Intermediate traded around $76, NDTV Profit said on August 7. Lower oil costs reduce overall inflation concerns, which can push the US Federal Reserve to keep interest rates low or cut them. Since gold pays no interest, lower rates make the metal more attractive. On August 5, Brent crude traded at $80.29 per barrel, and WTI was at $76.20, according to NDTV Profit.

Geopolitical developments added to the bullish sentiment. Hopes of a shipping arrangement through the Strait of Hormuz eased concerns over supply disruptions, offsetting Thursday's report that Iran's parliament was reviewing restrictions on "hostile" vessels transiting the waterway, NDTV Profit reported, citing Kaynat Chainwala, AVP Commodity Research at Kotak Securities. US President Donald Trump on Thursday reiterated his belief that the war between the United States and Iran will conclude soon, while pushing back against reports that American munitions stockpiles were running low. Speaking to reporters in the Oval Office, Trump said, "I started the very important excursion into the Islamic Republic of Iran, it was a very important excursion because they can't have a nuclear weapon. I think the war is going to end soon, I don't think they can go much longer." His comments come as US officials signal that a deal is close on reopening the Strait of Hormuz, a critical Gulf shipping corridor.

Earlier, on August 5, Trump said that Iran is "moving along very nicely" and indicated that more clarity could emerge within 48 hours, according to NDTV Profit. Speaking to reporters in Los Angeles, he said Iran would be "very smart" to reach a deal, leaving the conflict situation in another haze.

The Reserve Bank of India's decision to keep the repo rate unchanged at 5.25% and its projection of inflation peaking between October and December may have kept traders leaning toward safe-haven assets like gold and silver, NDTV Profit reported on August 5. The Monetary Policy Committee noted that headline inflation has moved above target, driven largely by food and fuel prices.

Silver also saw sharp gains. Spot silver surged 4.9% to $62.44 per ounce on Thursday, reaching its highest level since July 6, The Times of India reported. On MCX, silver September futures jumped 3.56% or Rs 8,040 to Rs 2,33,876 per kg on August 7, according to NDTV Profit. In Delhi, silver prices rose Rs 2,100 to Rs 2,34,800 per kilogram on Thursday, supported by a weaker rupee and firm global prices.

**Outlook hinges on US payrolls data**

Market attention now turns to the US nonfarm payrolls report, the week's key catalyst for Federal Reserve rate expectations, Chainwala said, as reported by NDTV Profit. Traders currently assign a 55% probability to a September rate move, down from 63% a week earlier, according to CME FedWatch. Chainwala noted that 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.

Independent metals trader Tai Wong said stronger gains across precious metals would likely require markets to begin pricing in interest rate cuts, but such expectations are unlikely to materialise before 2027, suggesting the current rally may remain dependent on currency movements and geopolitical developments, The Times of India reported.

JP Morgan said exchange-traded fund 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 noted that rate-sensitive ETF inflows are increasingly influencing bullion's direction.

Platinum and palladium also gained. Platinum traded near its strongest level since June 17, while palladium climbed to its highest level since June 2, The Times of India reported. Standard Chartered expects platinum to remain undersupplied this year, while forecasting palladium to move into surplus in 2026.

On MCX, gold October futures rose Rs 654, or 0.44%, to Rs 1,49,147 per 10 grams on Thursday, driven by fresh positions built by speculators amid firm spot demand, The Times of India said. Globally, gold futures rose 0.18% to $4,254.38 per ounce in New York.