Gold advanced for a third consecutive session on Wednesday, trading higher in Asia and holding near $4,100 an ounce as reports of an imminent deal to reopen the Strait of Hormuz eased inflation concerns and reduced the odds of a near-term Federal Reserve interest rate increase.

The move builds on gains seen earlier in the week as diplomatic signals around the strait strengthened. Reports said the US, Iran and Oman are nearing an interim agreement aimed at a Wednesday announcement to restore the US-Iran ceasefire and resume nuclear talks.

Gold’s rally has coincided with a notable shift in interest rate expectations. Markets have trimmed the implied probability of a September Federal Reserve rate hike to around 57%, down from roughly 67% a day earlier, as the prospect of easing Middle East tensions has started to remove some of the inflationary pressure linked to elevated oil prices. Lower expectations for near-term tightening typically support gold, which does not pay interest and tends to benefit when the opportunity cost of holding it falls.

Investors are now focusing on a fresh round of US labour market data, including private payrolls figures and Friday’s non-farm payrolls report, for further clues on the Fed’s policy path. Those releases matter because they can help shape expectations for how long interest rates may stay where they are, a key backdrop for non-yielding assets like bullion.

Beyond the immediate geopolitical catalyst, gold continues to draw support from more structural sources of demand. Gold-backed exchange-traded funds in China have kept attracting inflows, with institutional investors continuing to support bullion above the closely watched $4,000 an ounce level even as some of the immediate risk premium tied to the Hormuz situation begins to unwind.

Central bank buying has also remained a persistent feature of the gold market through 2026, with reserve managers around the world continuing to diversify holdings amid ongoing geopolitical uncertainty. The Bank of Korea, for example, recently signalled plans to resume gold purchases for the first time in 13 years, citing geopolitical risk as a key motivation. That move followed a broader trend of central banks buying gold at a near-record pace in recent quarters.

Gold’s performance this year has been volatile but broadly elevated. The metal surged to record highs above $5,500 an ounce in January before retreating sharply, then dipped below $4,000 an ounce in late June before stabilising and gradually recovering.

Even with the recent pullback in geopolitical risk premium, gold remains one of the strongest-performing major assets over the past year, supported by persistent central bank demand, retail and institutional buying in Asia, and lingering uncertainty over whether any near-term diplomatic breakthrough in the Middle East will hold.

If the reported Hormuz deal is confirmed and sustained, some of the safe-haven bid now supporting gold could fade. Even so, structural demand from central banks and Asian investors is likely to keep providing a floor under prices, while upcoming US data may determine whether the latest move extends or simply reflects a pause in the broader consolidation.

Earlier this week, Deutsche Bank said gold’s correction was largely done and maintained its US$4,600 fourth-quarter target.

Related coverage:

• https://investinglive.com/commodities/icymi-bank-of-korea-to-resume-gold-buying-after-13-years-not-large-buying/
• https://investinglive.com/commodities/deutsche-bank-sees-gold-s-correction-as-largely-done-holds-us-4600-q4-target
• https://investinglive.com/commodities/us-iran-and-oman-near-interim-deal-to-reopen-strait-of-hormuz/