Gold prices climbed 3% on Tuesday as optimism over a potential deal in the Strait of Hormuz boosted risk appetite and a weaker US dollar made the metal cheaper for foreign buyers.
Strait of Hormuz optimism fuels rally
Traders are betting that diplomatic efforts in the strategic waterway will lead to an agreement, easing tensions that have rattled global markets. The Strait of Hormuz is a critical chokepoint for oil shipments, and any resolution there could reduce geopolitical risk. Yet gold, often seen as a safe haven, rose anyway — a sign that the dollar's slide outweighed the usual safe-haven discount.
Dollar weakness adds support
The US dollar index fell against a basket of major currencies, making gold priced in dollars more attractive to international investors. A weaker greenback has been a consistent tailwind for commodities this month, and Tuesday's move extended that trend. The 3% gain in gold was one of the largest single-day moves in recent weeks.
No specific price level was given, but the percentage increase reflects broad buying across futures and exchange-traded funds.
The rally comes as traders also watch for any official statements from parties involved in the Strait of Hormuz talks. Whether the optimism translates into a formal agreement remains the key question for gold investors in the days ahead.
