Gold Climbs Amid Geopolitical Tensions: A Sanctuary Shine

Gold prices surged by 2% on Wednesday, extending gains after a sharp decline, driven by geopolitical uncertainty. U.S. futures rose by 2.6%, following a previous record high. The bounce back is seen as a potential start of a consolidation phase, amid ongoing US-Iran tensions and economic forecasts.

Gold prices surged on Wednesday, marking a continuation of gains from the previous session after experiencing one of the steepest sell-offs in decades. The broader geopolitical uncertainty has driven investors back to the safe-haven metal, with spot gold rising by 2% to $5,038.99 per ounce as of 09:08 a.m. ET (1408 GMT), extending a 5.9% rise on Tuesday.

The U.S. gold futures for April delivery increased by 2.6% to $5,061.90 per ounce. This comes after a dramatic slide of more than 13% on Friday and Monday, marking its steepest two-day sell-off in decades after reaching a record high of $5,594.28 the previous Thursday. Despite the tumultuous fluctuation, gold remains up over 17% for the year.

Analysts, like Marex's Edward Meir, suggest that gold may be entering a consolidation phase, potentially trading sideways rather than experiencing sharp swings in the upcoming weeks. Concurrently, geopolitical tensions persist as Iran and the United States are set to engage in talks in Oman, despite escalations following the U.S. military's downing of an Iranian drone near a U.S. aircraft carrier in the Arabian Sea. In the economic landscape, U.S. private job growth fell short of expectations, with ADP reporting 22,000 jobs added in January versus the forecasted 48,000. The anticipated U.S. nonfarm payrolls report has been delayed due to a temporary government shutdown, with investors looking towards potential interest rate cuts in 2026.

(With inputs from agencies.)