Gold jumped above 4,200 dollars per troy ounce on Wednesday, a rise of more than 2 to nearly 3 percent from Tuesday’s close, while silver climbed more than 3 percent to above 62 dollars. The trigger is a new phase in the Iran file. For the first time since the war around the Strait of Hormuz began, this is no longer just an informal pause in the strikes, but a detailed interim deal reportedly within reach to fully reopen the shipping lane.
For the first time, a deal on the table, not just a pause
Treasury Secretary Scott Bessent told the US network CNBC on Wednesday that there is a chance the US and Iran could reach a deal that same day or the next. His exact words were that there is a chance a deal comes today or tomorrow to open the Strait and move toward a more normalised position in this conflict. Shortly after, the US government stated that the Strait of Hormuz is once again free and open. According to reporting from, among others, Axios, it would involve an interim arrangement of at least sixty days, under which Iran and Oman would jointly administer passage. Inbound ships would follow a northern route along the Iranian coast, outbound ships a southern route in Omani waters, without tolls or fees during that period, and with mines cleared from the median lane within thirty days.
A formally signed deal does not yet exist at the time of writing. That clearly sets this news apart from late July, when an informal, unannounced pause in the fighting was already enough to lift the rate. This time it concerns a concrete, detailed proposal with a timeline and clear terms, which the market appears to find more convincing.
Why a deal is pushing the gold price up rather than down
Oil reacted the most sharply. Brent had already given up more than 5 percent on Tuesday and the decline continued Wednesday, with WTI around 73.50 dollars a barrel, its lowest level in three weeks. Less risk of an oil shock through the Strait of Hormuz means less upward pressure on inflation, which lowers the odds that the Federal Reserve still has to raise rates further this year. According to market data, investors now price in only one more rate hike for the rest of the year, down from two earlier this week. ING analysts noted that lower energy prices ease inflation concerns somewhat and create a more supportive climate for gold, while adding that the rate remains, in their view, caught between improving geopolitical sentiment and lingering uncertainty over US rates.
It is the same mechanism that already produced a surprising rate rise in late July, during an earlier, far shakier pause in the conflict. Less war risk normally pushes the gold price down through the classic safe-haven reflex, but that same easing of tension can, through cheaper oil and a lower rate outlook, push the rate precisely up. Today that second mechanism won out again, and more convincingly than in July.
Friday brings the next test
The timing is telling once again. This Friday, August 7, the US publishes the July jobs report, the week’s most important economic release according to ING analysts. A weak figure could further temper rate expectations and give gold an extra boost, while a strong figure could produce the opposite effect. Add to that the fact that the Hormuz deal is not yet signed and could still fall apart at any moment, and the picture is one of a market that could swing hard in either direction over the coming days.
What this means for those wanting to sell old gold
For anyone with old gold, jewellery, coins or silver cutlery at home, the bigger picture does not change. Gold and silver still trade well above the level of a year ago, even after this jump of several percent in a single day. It is precisely that speed that makes it risky to rely on a rate from a few days ago. A deal not yet signed, combined with Friday’s US jobs figures, can move the gold and silver price in either direction over the coming days. Anyone considering selling old gold would therefore do best to have the value of jewellery, coins or bars assessed at the moment of sale itself, at a buyer who applies the current rate rather than an outdated figure.
Whether the Hormuz deal holds, and how the market reacts on Friday to the jobs figures, cannot be said with certainty today. What is certain is that the gold and silver market once again deserves the full attention of anyone considering a sale this week.