Gold rose on Friday, heading for its first weekly gain in 5 weeks, as the dollar weakened and investor bets on a U.S. interest rate hike fell after weaker-than-expected employment data in the United States, while oil prices remained near pre-U.S.-Israeli levels on Iran as markets awaited the path of reopening the Strait of Hormuz.
Gold in ongoing contracts was at $4,188.10 an ounce, up 1.51%, while silver was at $62,945, up 3.08%.
Spot gold traded near $4,170.91 an ounce, silver at $62.32, and platinum at $1,665, while palladium climbed to $1,284.50 an ounce.
Gold benefits
Spot gold rose more than 1% in early Asian trading to its highest level since June 23 and is on track for weekly gains after U.S. jobs data eased fears of further monetary tightening in the United States.
The U.S. Bureau of Labor Statistics said nonfarm payrolls increased by just 57,000 jobs in June, with the unemployment rate remaining close to 4.2% and the labor force participation rate falling to 61.5%, data that bolstered markets' reading that the Federal Reserve may not move quickly toward raising interest rates.
CME Group's FedWatch tool shows the odds of the Fed's decisions as priced in the 30-day Fed interest contracts, while market data after the jobs report showed the probability of a rate hike in September fell to around 54.8% from 64.3% before the data.
The data put pressure on the dollar, as the U.S. dollar index fell to 100.72 points in the latest available reading, down 0.13% during the session, after erasing part of its weekly gains following the jobs report.
The euro was at $1.1484, the pound at $1.3369, and the Australian dollar at $0.6931.
Gold usually benefits from a weaker dollar because the U.S.-denominated metal becomes less expensive for holders of other currencies, and it also benefits from lower expectations of interest rate hikes, because the precious metal does not generate a return, and its attractiveness decreases when returns on dollar assets rise.
Oil moves cautiously
In the oil market, prices rose slightly ahead of a long weekend in the US, with Brent crude at $72.35 per barrel, up 0.77%, while US crude reached $69.12 per barrel, up 0.63%, at the time of writing.
Oil traffic has been limited with cautious optimism about efforts to stabilize the path of peace between the United States and Iran, and the gradual return of shipping through the Strait of Hormuz after months of turmoil.
Prices had fallen in the previous session to their lowest levels since before the outbreak of the Iran war in late February.
The importance of the Strait of Hormuz lies in the fact that in 2024, about 20 million barrels of oil would pass through it, equivalent to about 20% of the world's consumption of petroleum liquids, in addition to about one-fifth of the global liquefied natural gas trade, according to the US Energy Information Administration.
Kuwait's oil production rose to 1.65 million bpd in June, up from 580,000 bpd in May, Reuters said, after the OPEC member boosted its exports following an interim peace deal between the United States and Iran.
At least five supertankers carrying about 10 million barrels of Saudi oil have also exited the Strait of Hormuz, as Saudi Aramco has switched to spot pricing to accelerate sales in Asia.
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