Gold prices climbed above $4,250 per ounce on Thursday, extending this week’s rally to a seven-week high, as easing energy costs weakened expectations that the Federal Reserve will raise interest rates this year. US officials signaled they are pursuing a ceasefire with Iran and an agreement to safeguard trade routes through the Persian Gulf. Those developments have driven fuel prices sharply lower since the start of August, easing worries that energy-driven inflation will feed through into broader consumer prices.
With inflation pressures seen as more contained, Treasury yields retreated, supporting bullion by reducing the opportunity cost of holding non-yielding assets such as gold. Meanwhile, data from clearing institutions showed that institutional investors in China continued to add to their long positions in gold-backed assets, seeking protection from volatility in technology stocks and responding to signs of renewed strength in the physical gold market, which has been underpinned recently by central bank purchases.
