WASHINGTON (dpa-AFX) - Extending the gains from yesterday's session, gold prices have surged on Friday as a plunge in crude oil prices following the reopening of the Strait of Hormuz deflated concerns of a near-term U.S. Federal Reserve interest rate hike.
Front Month Comex Gold for August month delivery has soared by $51.20 (or 1.26%) to $4,098.80 per troy ounce.
Front Month Comex Silver for August month delivery also surged by $0.910 (or 1.55%) to $59.500 per troy ounce.
On June 17, U.S. President Donald Trump and Iran's President Masoud Pezeshkian signed a brief Memorandum of Understanding to end their mutual conflict and extend the ceasefire (earlier announced in April) for another 60 days.
Both nations agreed to discuss all contentious issues and chart a framework to resolve the disagreements through several rounds of negotiations.
Soon after the signing of the MoU, Iran reopened the Strait of Hormuz which it had shut after the breakout of war.
On its part, the U.S. lifted its naval blockade on Iran and later granted an interim license to Iran to export its crude oil, petroleum, and petrochemical products until August 21.
Shipping traffic through the Strait of Hormuz gradually picked up as concerns related to Iran-planted sea mines continue to persist. According to the MoU, Iran should clear the mines over 30 days.
Yesterday, the U.K. Maritime Trade Operations center announced that a Singapore-flagged container, (named Ever Lovely) transiting through a new U.N. backed route was struck by an unknown projectile on the starboard side.
The attack came 7.5 nautical miles southeast of Dahit, in Oman's Musandam exclave. Though no casualties were reported, the UKMTO advised vessels to pass through this area with caution.
The Iranian military had earlier threatened ships not to travel through the strait without its permission. Trump criticized the action as a foolish violation of the ceasefire but stated nothing to renew escalation concerns.
U.S. Secretary of State Macro Rubio dismissed concerns about the possibility of Iran collecting a toll as Iranian leaders have been asserting that they have full authority over the strait.
The U.S. administration reassured that no country will be allowed to charge a toll for shipping traffic across the Strait of Hormuz.
Experts are of the view that as shipping traffic speeds up, oil prices could turn more lower leading to further easing of inflationary pressure.
Yesterday's data on U.S. Personal Consumption Expenditures showed a 0.40% rise on a month-on-month basis in May. The core PCE was steady at 0.30% in line with expectations.
In addition, the unemployment benefit claims eased by 12,000 to 215,000 for the third week of June.
The softer monthly numbers relieved investors of any concerns of immediate rate hike by the Fed. A low-interest rate regime supports gold as it enables brisk buying by overseas buyers.
Still, traders are cautiously optimistic on the developments amid prevailing uncertainty over U.S.-Iran final agreement.
The U.S. dollar index was last seen trading at 101.32, down by 0.19 points (or 0.19%) today.
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