Gold Rises as Buying Interest Counters Concern Over Hormuz Clash

One-ounce and one kilogram gold bars at a Goldenmark bullion dealer arranged in Warsaw, Poland, on Wednesday, Jan. 28, 2026. Gold surged to a record above $5,500 an ounce, extending a breakneck rally fueled by a weaker dollar and investor flight from sovereign bonds and currencies to a ninth day. Photographer: Damian Lemanski/Bloomberg Photo by Damian Lemanski /Bloomberg

Article content

(Bloomberg) — Gold rose as signs of buying interest emerged in the wake of strong purchases by China’s central bank, even as fresh clashes in the Middle East threatened to fracture a fragile ceasefire.

Article content

Bullion traded near $4,720 an ounce, after ending the previous session marginally lower. The US struck military targets in Iran after the country fired on three navy destroyers sailing in the strait. 

Article content

Article content

Article content

The clashes heightened tensions as the US waits for Iran to respond to its proposal to reopen the Strait of Hormuz, a vital waterway for energy flows, amid efforts to exit a war now in its third month.

Article content

Article content

“The ongoing disruption in the Strait continues to keep energy markets volatile and inflation expectations elevated,” said Manav Modi, commodities analyst at Mumbai-based Motilal Oswal Financial Services Ltd. The current situation has reinforced concerns that the Federal Reserve could maintain a higher-for-longer interest rate stance, he said. 

Article content

Set against that, there are signs central bank demand, a major contributor to gold’s multiyear rally, may continue. The People’s Bank of China — among the biggest official sector buyers of the precious metal — bought 8.1 tons in April, the most since December 2024. 

Article content

The PBOC’s buying streak “can be encouraging for Asian buyers,” said Ahmad Assiri, an analyst at Pepperstone Group Ltd. “What we see for now is early positioning for the potential rally” to follow once the worst of the Middle East conflict is over, he said. 

Article content

Gold has fallen around 11% since the conflict erupted, as the near-closing of Hormuz and resulting energy price shock fanned concerns about rising inflation that would keep interest rates elevated. Higher rates and a stronger US currency are negative for bullion as it pays no interest and is priced in the greenback. 

Article content

Traders will be tracking US non-farm payrolls due for release later Friday for clues on the trajectory of rates. Some Federal Reserve officials have played down the prospect of a return to monetary easing, as the statement after last week’s policy meeting suggested, given that the war is clouding the economic outlook. 

Article content

Spot gold rose 0.7% to $4,719.87 an ounce as of 3:11 p.m. in Singapore, for a 2.3% weekly gain. Silver climbed 2.1% to $80.11 an ounce, while platinum and palladium also advanced. The Bloomberg Dollar Spot Index, a gauge of the US currency, was flat. 

Article content