Gold Bounces Back Above $5,000 as Iran Talks Collapse

TLDR

• Gold climbed back above $5,000 an ounce after jumping 2.1% on Wednesday
• Fed minutes showed officials were cautious about cutting rates at their January meeting
• Strong US economic data kept the dollar firm, limiting gold’s gains
• Goldman Sachs, BNP Paribas, and Deutsche Bank all forecast gold will trend higher
• US-Iran nuclear talks ended without a deal, adding to geopolitical uncertainty

Gold pushed back above $5,000 an ounce on Thursday, extending a recovery that began the previous session. Spot gold rose 0.9% to $5,019 during Asian trading, while US gold futures gained 0.6% to $5,037.75.

Trading was lighter than usual with several Asian markets closed for Lunar New Year. Dip-buyers were active for a second straight day.

The metal had fallen sharply at the start of February after hitting an all-time high above $5,595. Markets have been choppy since that peak.

Wednesday’s 2.1% jump recovered most of the week’s earlier losses. Gold is now attempting to stabilize after one of its sharpest pullbacks in recent months.

Fed Signals Caution on Rate Cuts

The Federal Reserve released minutes from its January 27-28 meeting on Wednesday. Officials were more cautious about cutting interest rates than many in the market had expected.

That puts the Fed at odds with President Donald Trump, who has publicly pushed for lower borrowing costs. Trump’s nominee for Fed chair is Kevin Warsh.

Gold pays no yield, so it tends to benefit when interest rates fall. Caution from the Fed limits that tailwind for now.

The dollar held its gains on Thursday after rising Wednesday on strong US economic data. Industrial production posted its largest monthly increase in nearly a year, and core capital goods orders beat expectations in December.

Major Banks Forecast Gold Will Climb Again

Goldman Sachs, BNP Paribas, and Deutsche Bank have all forecast that gold will resume its upward trend. They point to concerns about Fed independence and a broader shift away from sovereign currencies and bonds.

Geopolitical tensions continue to support demand for gold. Silver also gained on Thursday, rising 2.5% to $79.16 an ounce. Platinum and palladium both moved higher as well.

Iran Talks Add to Uncertainty

US-Iran nuclear negotiations took place in Geneva this week but ended without an agreement. A US official said Iranian representatives would return in two weeks with detailed proposals to address the gaps between both sides.

US outlet Axios reported that any potential US military operation against Iran would likely be a weeks-long campaign. No such operation has been confirmed or announced.

As of Thursday afternoon Singapore time, spot gold was trading at $5,017.88 an ounce.

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