Gold prices edged higher on Friday, recovering from a steep decline earlier in the week as bargain hunters stepped in around key support levels.
Spot gold rose 1.5% to US$4,720.20 per ounce by 3:15 pm AEDT (4:15 am GMT), rebounding from the $4,600 support level as investors returned to the market following recent heavy selling.
The precious metal is attempting to claw back part of its roughly 7% weekly loss, with profit-taking among bearish positions providing short-term support after a sustained decline.
Despite the rebound, sentiment remains fragile. Gold came under significant pressure on Thursday, even as the U.S. dollar weakened amid strength in the euro and Japanese yen following hawkish signals from global central banks.
The Federal Reserve held interest rates steady this week, a stance mirrored by the Bank of Japan, Bank of England and European Central Bank, all of which noted uncertainty stemming from rising energy prices and the risk of an inflation shock linked to the escalating Middle East conflict.
Ongoing hostilities between Israel and Iran have heightened market volatility, with investors liquidating gold positions to cover losses in other asset classes as risk aversion intensified.
At the same time, markets have increasingly pushed out expectations for interest rate cuts by major central banks, reducing the appeal of non-yielding assets such as gold.
