Gold prices climbed during Asian trading on Friday, reaching their highest level since 29 May as the United States dollar hovered near a three-month low amid fading expectations for further Federal Reserve interest-rate hikes.
By 4:25 pm AEST (6:25 am GMT), spot gold was up 0.8% at US$4,556.76 an ounce.
The precious metal has benefited from a weaker dollar, although concerns over inflation driven by higher oil prices could limit further gains by supporting U.S. Treasury yields.
The ongoing U.S.-Iran standoff over the Strait of Hormuz has also kept geopolitical risk elevated, prompting investors to remain cautious.
Yemen's Iran-backed Houthi group said it had targeted eight oil tankers since announcing a maritime blockade of Saudi shipping in late July.
The claims have raised concerns over a broader regional conflict and helped push oil prices to a three-week high on Thursday.
Higher oil prices and renewed geopolitical tensions have, to a large extent, overshadowed the U.S. Treasury Department's decision to double the size of some long-dated debt buyback operations, while supporting elevated Treasury yields.
Meanwhile, minutes from the Federal Open Market Committee's 28-29 July meeting showed that policymakers believed interest rates may need to rise soon unless there was further progress towards bringing inflation under control.
The CME Group FedWatch Tool showed markets pricing in a roughly 66.4% probability that the Federal Reserve will raise borrowing costs at least once before the end of the year.
