Gold is experiencing a significant uplift due to a confluence of factors: anticipation of a deal in Hormuz, which is expected to alleviate inflation and reduce the likelihood of aggressive rate hikes, and a weakening US dollar. This scenario makes gold a more attractive safe-haven asset and a better store of value.
The anticipated Hormuz deal, if it eases inflation and reduces future rate hike concerns, creates a 'goldilocks' scenario for gold, as lower real interest rates make non-yielding assets more appealing. Concurrently, a weaker dollar directly boosts gold's appeal for international buyers. This combination suggests continued upward pressure on gold prices, benefiting precious metal miners and gold-backed ETFs. However, any unexpected hawkish shift from central banks or a stronger-than-anticipated dollar rebound could temper gold's gains. Investors should monitor geopolitical developments in Hormuz and central bank rhetoric closely.