Gold prices have gained significant momentum as expectations for tighter monetary policy have eased and central banks have continued adding the metal to their reserves, according to precious metals analysts at Heraeus.

Gold climbed more than 7% last week, marking its strongest weekly performance since January. The rally pushed prices above $4,300 per ounce, breaking out of the trading range that had largely held since mid-June.

Analysts attributed the move partly to improving expectations surrounding a potential agreement between the United States and Iran that could allow the Strait of Hormuz to reopen. The possibility of lower oil prices has reduced concerns about inflation and, in turn, weakened expectations for additional monetary tightening.

Silver also benefited from the broader precious metals rally, gaining more than 10% last week, its strongest weekly increase since January.

Lower Oil Prices Ease Rate Concerns

Brent crude fell below $85 per barrel last week after reaching around $100 on July 23. The decline in energy prices has contributed to a lower probability of another Federal Reserve rate hike at the September 19 meeting.

While markets still anticipate at least one rate increase this year, a sustained decline in oil prices could reduce inflationary pressure. That could make further monetary tightening less necessary and potentially provide additional support for gold and other precious metals.