Gold holds near seven-week highs as Hormuz doubts revive risk premium

Gold has hovered around the $4,240 mark on Thursday, after initially peaking at $4,304. The shift was sparked by the details of the Strait of Hormuz arrangement, which pushed up US Treasury yields and sparked speculation of a Federal Reserve hike. The US Dollar reacted similarly, climbing to around 100.00. This contrasted with the market's morning outlook, and the cause was the threat of limited access to the Strait of Hormuz due to restricted access for vessels associated with countries Tehran deemed hostile.

Crude oil prices surged, and this energy price rise added to the inflation concerns the Fed already has. As yields rise, holding non-yielding assets becomes more expensive, thus weighing on the price of Gold. Friday's Nonfarm Payrolls report, showing an expected 80K rise in employment for July, will be the next test. Meanwhile, XAU/USD was trading at $4,253 on the 4-hour chart, still showing a bullish short-term trend, staying above key moving averages.

On the technical side, the Relative Strength Index (RSI) at 72 suggests the asset is in overbought territory, which could limit further gains. The resistance is first seen at $4,276, followed by a stronger barrier at $4,304. The support levels, $4,248 and $4,232, act as a stronger foundation for a potential pullback.