Gold prices traded higher during Friday's Asian session after once again attracting buying interest near the key psychological level of US$4,650, as broader risk aversion supported safe-haven demand.
By 3:30 pm AEDT (4:30 am GMT), spot gold was trading 1.1% higher at US$4,831.38 per ounce, recovering from recent losses amid volatile conditions across global financial markets.
The move came as the United States dollar retreated from ten-day highs, with investors pausing after a recent uptrend.
Recent sessions have been characterised by rotational flows, with investors repositioning away from assets viewed as overvalued - including technology stocks and precious metals - and into perceived value plays such as the U.S. dollar.
On Thursday, gold came under additional pressure after dovish policy signals from the Bank of England and the European Central Bank weakened the pound sterling and the euro, respectively, strengthening the U.S. dollar and dragging the metal lower.
Despite the pullback, the broader bullish case for gold remains intact amid ongoing geopolitical tensions between the United States and Iran.
Markets are closely monitoring diplomatic developments as heightened rhetoric and military posturing continue to add a risk premium to safe-haven assets.
Meanwhile, Russia, Ukraine and the United States concluded a second round of peace talks in Abu Dhabi, agreeing to a significant prisoner exchange but leaving major political and security issues unresolved.
Monetary policy expectations are also contributing to gold’s appeal. Uncertainty surrounding the Federal Reserve’s interest rate trajectory, particularly under the leadership of Fed Chair nominee Kevin Warsh, has reinforced support for non-yielding assets such as gold.
Recent U.S. data has added to the mixed outlook. The delayed Job Openings and Labor Turnover Survey (JOLTS) showed continued softening in labour demand, while initial jobless claims increased by 22,000 to a seasonally adjusted 231,000 for the week ended January 31, according to the Labor Department.
Although traders are still pricing in two rate cuts this year, based on CME FedWatch Tool data, expectations for a move as early as June have edged higher in recent sessions.
