Gold rally toward $4,500 hinges on Brent, yields, Fed path

Gold spot traded at $4,235.89/oz as of 12:18 p.m. ET Aug. 5, up 3.89% in 24 hours, after failing to hold above $4,300.

"The overnight move above the 50-day SMA for the first time since March 17 was a fresh trigger for bulls, but it will be prudent to wait for follow-through buying beyond the 23.6% Fibonacci retracement before positioning for further gains," Haresh Menghani, an analyst at FXStreet, said.

The rally has macro support. The US 1-year inflation swap fell 5.5 basis points to 1.86%, the lowest since September 2024, while the 10-year Treasury yield dropped 5.8 basis points to 4.68% on Aug. 3, according to Deutsche Bank. ADP data showed private payrolls grew 40,000 in July, down from 95,000 and below consensus, trimming the probability of a September Fed rate hike to roughly 55% from 67%.

Gold last traded above $4,500 in June, and the 200-day SMA at that level marks the next objective. Whether it gets there hinges on the Strait of Hormuz talks — a durable US-Iran deal would weigh on gold through lower crude and reduced safe-haven demand, while a breakdown could accelerate the advance.

Brent Crude Sets the Tone

Brent crude fell 4.73% to $83.77/bbl on Aug. 3, and WTI dropped 5.11% to $80.34, after Treasury Secretary Scott Bessent said a Hormuz deal could come "tomorrow." Iran said it is in the final stage of drafting an agreement with Oman over the strategic waterway, which would end a five-month US-Iran war that closed the strait and caused the largest oil supply disruption on record. Goldman Sachs expects Brent to trade within an $80-$90/bbl range until a new US-Iran agreement is confirmed or attacks escalate significantly.

Lower crude eases inflation fears and reduces the safe-haven bid that pushed gold to a record $5,597.23/oz on Jan. 29. The metal remains up 4.15% from last week and 1.46% from a month ago, with the 52-week low at $3,301.77.

Yields and the Fed Path

The 30-year real yield fell 3.6 basis points to 3.00%, and the 1-year inflation swap at 1.86% is dismantling the near-term inflation premium built through July as the conflict intensified. Fed Governor Lisa Cook said inflation remains too high and she is prepared to raise rates if disinflation stalls, while San Francisco Fed President Mary Daly said officials need more data before the September meeting. Traders still price about an 80% chance the Fed raises borrowing costs by year-end because of inflation risks from Red Sea supply disruptions.

Gold's technical setup supports the advance: the MACD at 29.52 and RSI at 61.28 point to improving momentum, with the 50-day SMA at $4,157.24 as immediate support. JP Morgan's global research forecast sees gold climbing toward $4,000 by mid-2026, a level already exceeded. Friday's nonfarm payrolls report will shape Fed expectations and, with Hormuz headlines, decide whether gold clears $4,500.

This article is for informational purposes only and does not constitute investment advice.