Gold touches seven-week peak on Strait of Hormuz reopening hopes

Aug 6 (Reuters) - Gold advanced for a fourth straight session on Thursday and touched its highest level in seven weeks, helped by weaker oil prices, a softer dollar and lower Treasury yields, on growing hopes over the Strait of Hormuz reopening.

Spot gold XAU= was up 1% at $4,285.84 per ounce by 0132 GMT, the highest level since June 18. On Wednesday, bullion posted its biggest daily gain since February.

U.S. gold futures GCcv1 rose 0.9% to $4,345.80.

"The sharp rally came on building optimism that a diplomatic breakthrough in the Middle East is close to being finalised. This in turn would keep downside pressure on oil prices and reduce the need for central banks to raise rates, providing a clear tailwind for gold," IG market analyst Tony Sycamore said.

A sustained break above the 200-day moving average could pave the way for a stronger recovery toward the $5,000 mark, he added.

A proposed deal between Iran and Oman to help end five months of war between Iran and the United States would give Tehran control over ships entering the Gulf through the Strait of Hormuz, a senior Iranian source and two regional officials told Reuters. Oil prices slipped on Thursday. O/R