Gold reaches seven-week high on weaker dollar and oil dip

Gold prices surged to a seven-week high on Thursday, August 6, extending a rally fueled by a weaker U.S. dollar, falling Treasury yields, and growing optimism for a diplomatic resolution to Middle East tensions. The precious metal climbed for a fourth consecutive session, with spot gold rising 1.1 percent to $4,293.94 an ounce after touching an intraday high of $4,304.15. U.S. gold futures also gained 1.1 percent to $4,353.12.

The rally was primarily driven by reports that Iran and Oman are nearing an agreement aimed at reopening the Strait of Hormuz, a critical global oil shipping lane. The prospect of smoother energy shipments pushed oil prices lower, easing broader inflation concerns and reducing expectations that the Federal Reserve will maintain an aggressive interest rate policy. Markets now estimate roughly a 55 percent chance of a rate hike in September, down from 67 percent earlier in the week.

A softer U.S. dollar and declining Treasury yields further supported gold by making the dollar-priced metal less expensive for international buyers. The dollar's weakness followed reported currency intervention by U.S. and Japanese authorities and disappointing U.S. economic...