Gold prices rebounded in Asian trade on Tuesday, recovering from recent heavy losses as the United States dollar’s upward momentum stalled and investors reassessed geopolitical and economic risks.
By 3 pm AEDT (4 am GMT), spot gold was trading 3.3% higher at US$4,815.75 per ounce, reversing part of the roughly 15% correction from record highs of US$5,598 reached earlier in the cycle.
Silver also advanced sharply, rising 5.3% to US$83.24 per ounce.
The recovery in bullion came as the U.S. dollar retreated, easing pressure on dollar-denominated commodities.
A key factor underpinning gold was the ongoing partial shutdown of the U.S. government, which entered its fourth day.
The Bureau of Labor Statistics announced it would not release the January jobs report as scheduled, while the JOLTS Job Openings Survey due this week has also been delayed.
With investors lacking timely data, uncertainty over the Federal Reserve’s policy path has increased, tempering demand for the U.S. dollar and providing an opening for gold to stabilise.
At the same time, improving global risk sentiment has created a more complex backdrop for safe-haven assets. Geopolitical tensions between the United States and Iran have shown signs of easing, reducing immediate fears of broader regional conflict.
In parallel, optimism surrounding a long-anticipated U.S.-India trade agreement has further supported risk appetite in financial markets.
Ordinarily, such an improvement in sentiment would weigh on traditional safe havens such as gold. However, the metal has continued to find buyers as investors balance easing geopolitical risks against mounting domestic economic concerns in the U.S.
The combination of a softer dollar and policy uncertainty has, for now, offset the drag from improved risk appetite.
Market participants noted that a recent “sell-everything” theme that pressured a broad range of asset classes has faded, allowing attention to shift back towards economic fundamentals. In this environment, gold has benefited from renewed portfolio diversification flows as investors hedge against potential volatility stemming from political and policy developments.
Looking ahead, the absence of key economic releases leaves markets more sensitive to central bank communication. Traders are expected to focus closely on speeches from Federal Reserve policymakers for signals on the interest-rate outlook.
This is particularly relevant as leadership changes loom at the central bank, with former Fed Governor Kevin Warsh set to assume a more prominent role from June.
