Gold rebounded above $5,000 per ounce on Wednesday after the US shot down an Iranian drone. The drone had reportedly “aggressively approached” a US aircraft carrier in the Arabian Sea, according to a US military spokesman. Tehran has not commented on the incident.
The precious metal, often seen as a safe-haven investment, rose sharply following days of decline. On Wednesday, gold reached $5,061 per ounce, about 80% higher than the same time last year.
Factors Behind Recent Volatility
Gold prices hit record highs earlier this year due to changes in US trade policy, geopolitical uncertainty, and central banks buying bullion. The metal peaked at $5,500 in January.
Last Friday, gold fell 9% after US President Donald Trump nominated Kevin Warsh as Federal Reserve chair. Investors viewed Warsh as a safe choice, easing concerns about central bank independence and interest rate cuts. This marked the biggest one-day drop in gold since 1983.
Analysts Weigh In
Emma Wall, chief investment strategist at Hargreaves Lansdown, said the current rise in gold is “mostly fuelled by speculators buying the dip.” She noted that the metal’s fundamental drivers remain intact but warned that volatility will continue. Key events include upcoming US interest rate decisions, the mid-term elections, and ongoing tensions in Ukraine and the Middle East.
Lindsay James, investment strategist at Quilter, highlighted that central banks from China to Poland continue to purchase gold, supporting its long-term price. She also pointed out that concerns over AI-driven disruption in technology and software sectors are pushing investors toward safe-haven assets.
Silver Also Recovers
Silver followed gold with a 5% gain on Wednesday, trading at $92 per ounce. Despite dropping sharply in a single day in January, silver remains nearly three times its value from a year ago.
