Gold prices after dropping are now again soaring above $5000/oz in Asian trade on Wednesday. Since the rising tension between Iran and the US increased the safe-haven demand for bullion.
The price of yellow metal rose after recovering sharply from recent losses on Tuesday. This increase is driven by the support of investors, as despite a big fall last week that was more than $1000, a large number of buyers still stepped in on dips, believing that the decrease may be temporary and considering it a buying opportunity.
The spot prices of gold increased to $5,060.28 per ounce, an increase of 2.3% by 01:17ET (06:17 GMT), while gold futures for April rose to $5,078.96 per ounce, a rise of 2.9%.
The major driver behind the increase in haven demand is the concerns over increasing tensions between the US and Iran. According to the reports cited by Investing.com, the US shot down an Iranian drone in the Arabian Sea. Moreover, the Iranian gunboats were also seen approaching a US-linked tanker in the Strait of Hormuz.
However, no comments have been received on this activity from both Washington and Tehran, and the representatives of the two nations will talk about this matter on Friday. The news about talks spread a relieving feeling within the market and also injured the haven demand for gold.
The recent losses in gold were attributed broadly to the bets that Kevin Warsh, nominated as the head of the Federal Reserve by US President Donald Trump, will be less dovish than market expectations.
This instigated a sharp increase in the dollar, which consequently put excessive pressure on metal markets. Gold was also open to profit-taking after rising to a record high of nearly $5600 per ounce last week. Nevertheless, despite recent losses, gold was still trading high by 15% in 2026.
ANZ analysts have argued that despite the short-term increasing or decreasing trend in gold prices, the primary reasons strengthening the gold prices have not changed. For instance, investors are still interested in buying gold amid geopolitical uncertainties and US-Iran tensions. Moreover, there is still steady real-world demand from investors and jewelry buyers. Central banks are also strengthening their reserves by buying gold.
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The other precious metals also increased on Wednesday as the spot price of silver rose to $87.4955/oz, an increase of 2.8%. The spot platinum also rose to $2,286.72/oz, a rally of 3%.
OCBC analysts, while commenting on this situation, stated that the recovery indicates that forced selling and margin-relevant liquidation pressures may have disappeared. However, they warned that the recovery still seems uncertain, subject to the sensitivity of USD, yield repricing, and uncertainty around the Fed’s policy under the new chair remains high.
But at the same time, OCBC considered the recent increase in gold prices as price normalisation instead of trend reversal. The brokerage indicated that gold would continue to benefit from central bank demand, while financial and geopolitical risks would continue to strengthen haven demand.
It is anticipated that silver will also benefit from this dual role as an industrial and precious metal. OCBC stated that the 2026 targets for gold and silver lie at $5,600/oz and $133/oz, respectively.
