Gold prices extended their rebound in Asian trade on Wednesday, pushing back above the US$5,000 mark as renewed safe-haven demand and a softer U.S. dollar supported the precious metal.
By 3:30 pm AEDT (4:30 am GMT), spot gold was trading 2.3% higher at $5,061.31 per ounce.
The move follows the metal’s largest daily gain since 2008 on Tuesday, and marks a continued recovery from four-week lows following a sharp two-day sell-off.
Investor demand for defensive assets strengthened amid resurfacing geopolitical tensions. The United States shot down an Iranian drone on Tuesday, while armed Iranian boats reportedly approached a U.S.-flagged vessel in the Strait of Hormuz, heightening concerns about potential escalation in the Middle East despite expectations of nuclear talks between Washington and Tehran later this week.
In Europe, Russia launched a major overnight drone and missile attack on Ukraine, adding to uncertainty ahead of renewed discussions between the two sides.
Currency dynamics also provided support. The U.S. dollar struggled to extend recent gains, with markets reassessing the outlook for U.S. monetary policy under a likely Federal Reserve leadership change.
Kevin Warsh, nominated by President Donald Trump to lead the central bank, has previously been viewed as an inflation hawk but is now widely expected to favour lower interest rates.
At the same time, balance sheet reduction is expected to feature prominently in his policy agenda when he assumes leadership on 16 May.
Uncertainty surrounding the Fed’s future stance has clouded the rate outlook, limiting the greenback’s momentum and underpinning demand for non-yielding assets such as gold.
Additional pressure on the dollar stemmed from disruptions to U.S. economic data releases linked to the recent partial government shutdown.
Although President Trump signed a spending deal into law on Tuesday to end the shutdown and allow further negotiations, some scheduled releases remain delayed, including the January jobs report.
Attention now turns to upcoming U.S. data, including the ADP monthly employment change and the ISM Services PMI.
