Bengaluru: Gold prices rose further on Wednesday on increased demand as a safe-haven asset. The renewed geopolitical tensions between the US and Iran have further boosted the prices of the yellow metal. In the previous session, gold had recorded its best day since 2008.
Spot gold rose 2.7 percent to $5,071.79 an ounce by 03:53, while on Tuesday it had jumped 5.9 percent, its biggest daily gain since November 2008. Last Thursday, gold had touched a record high of $5,594.82. US gold futures for April delivery rose 3.2 percent to $5,092.0 an ounce.
"Gold has bounced back above the key $5,000 level as geopolitical tensions after the US military shot down an Iranian drone have increased the metal's appeal as a safe haven," said Jigar Trivedi, senior research analyst at IndusInd Securities.
The US military on Tuesday shot down an Iranian drone that was "aggressively" approaching the USS Abraham Lincoln warship in the Arabian Sea. Meanwhile, Axios journalist Barak Ravid quoted an Arab source as saying that nuclear talks between the US and Iran are expected to take place in Oman on Friday.
On the other hand, US President Donald Trump on Tuesday signed a spending deal that ended the partial government shutdown. Investors are expecting at least two interest rate cuts by the Federal Reserve in 2026 and are awaiting the ADP personal payrolls data for more clues on the Fed's policy.
Non-interest bearing gold performs better in a low interest rate environment. Trivedi added that prices could touch $5,100 very soon and our target is $6,000 per ounce by the end of the year. Spot silver rose 3.2 percent to $87.84 per ounce, while platinum rose 2.9 percent to $2,273.70 and palladium gained 3 percent to $1,784.67.