FX.co ★ Gold Steadies Amid Hormuz Tensions

Gold traded above $4,200 an ounce on Friday, pausing its recent rally as renewed tensions in the Strait of Hormuz drove oil prices higher and reignited worries about inflation and the likelihood of a near-term Federal Reserve rate increase. Reports indicated that Iran struck what it called “hostile targets” in the strait following explosions near Qeshm Island. Tehran is also seeking to bar US and Israeli vessels from transiting Hormuz and to require countries it deems hostile to pay compensation before being granted passage. At the same time, Federal Reserve officials have increasingly signaled they are prepared to raise interest rates soon amid mounting inflation risks, with markets now pricing in a 25-basis-point hike in September. Separately, data from clearing houses showed that institutional investors in China continued to expand long positions in gold-backed assets as a hedge against volatility in technology stocks, a trend supported by ongoing central bank purchases.