Gold prices rebounded to hover around $5,100 on Wednesday, a day after posting their best day in more than 17 years, supported by safe-haven demand as the bullion becomes more attractive due to renewed geopolitical tensions between the United States and Iran.
Spot gold was up 2.9% at $5,082.94 an ounce at 0813 GMT, its biggest single-day gain since November 2008, after surging nearly 6% on Tuesday. Last Thursday, bullion hit an all-time high of $5,594.82.
U.S. gold futures for April delivery rose 3.4% to $5,103.50 an ounce.
The U.S. military said Tuesday it shot down an Iranian drone that approached the aircraft carrier USS Abraham Lincoln in an “aggressive” manner in the Arabian Sea.
Gold is rebounding from Monday’s low of $4,403.24 after its biggest two-day decline in decades.
“After such a sharp rally, a correction was expected, but it’s not surprising and the fundamentals haven’t changed all that much as gold is coming back,” said ANZ analyst Soni Kumari, adding that the geopolitical and economic backdrop remained largely unchanged.
Goldman Sachs said on Wednesday that it sees significant upside risks to gold’s year-end forecast of $5,400 as private investors ramp up gold ETF purchases while central banks maintain their recent pace of accumulation.
“Going forward, we expect (gold) to reach the same $5,600 level by the end of the first half or end of April, but prices will continue to rise after that, with a year-end target of $6,000 an ounce,” said Jigar Trivedi, senior research analyst at IndusInd Securities.
Spot silver rose 6.1% to $90.34 an ounce. It hit an all-time high of $121.64 on Thursday, but fell to a one-month low of $71.33 on Monday, following a record 27% single-session price decline on Friday.
Markets are currently awaiting ADP private payroll data for further clues on the Federal Reserve’s policy direction, even though the much-anticipated January jobs report has been delayed due to the partial U.S. government shutdown.
Spot platinum rose 5.6% to $2,334.25 an ounce, and palladium rose 5.4% to $1,826.21 an ounce.
