Gold rebounds as bargain hunters return

Gold prices climbed sharply on Friday, reversing part of this week’s slide as investors stepped back into the market after bullion fell to a four-month low, while traders also watched for any sign that tensions in the Middle East might ease. Spot gold rose more than 3% at its intraday peak before trading about 2.6% higher at $4,491.78 an ounce by afternoon dealings in New York, after touching as high as $4,554.39. US gold futures for April delivery settled 2.7% higher at $4,492.50.

The rebound followed a bruising stretch for the metal. Reuters reported that spot gold had dropped to $4,097.99 on Monday, its lowest level in four months, after a broader sell-off driven by a stronger dollar, surging oil prices and fears that the war-linked shock to energy markets would keep inflation elevated for longer. That pullback has tested the market’s conviction after bullion had surged to repeated record highs earlier this year. Bloomberg, describing the move as buyers returning from the brink of a bear market, said gold had fallen about 15% this month and nearly 19% from its January peak before bargain hunters re-emerged.

Analysts said the latest rise was driven less by a clear improvement in the geopolitical picture than by opportunistic buying after prices moved below technical support levels. Daniel Pavilonis, senior market strategist at RJO Futures, told Reuters that the earlier sell-off created an opening for investors because prices had slipped under the 200-day moving average, often seen as a signal that an asset has become oversold. That interpretation suggests Friday’s jump was at least partly a market correction rather than a wholesale return to the one-way rally that marked much of the past three years.

The wider backdrop remains complicated. The conflict centred on Iran has entered its fourth week and continued to ripple through commodity markets and monetary-policy expectations. Oil has stayed above $110 a barrel in parts of the week, stoking concern that higher fuel and fertiliser costs will feed inflation across major economies. Reuters reported that traders have fully priced out US rate cuts for 2026, a marked shift from expectations before the war began, while Federal Reserve officials have signalled that borrowing costs may need to stay high for longer as they gauge the inflation impact of the conflict.

That matters for gold because the metal yields no income. When interest rates are expected to remain elevated, the opportunity cost of holding bullion rises, making it less attractive than interest-bearing assets. Yet gold’s role as a hedge has not disappeared. The World Gold Council said total gold demand, including over-the-counter activity, exceeded 5,000 tonnes for the first time in 2025, while ETF holdings grew by 801 tonnes and central bank purchases remained historically elevated at 863.3 tonnes. Those figures underline how official-sector buying, investment demand and diversification flows have continued to support the market even as prices have become more volatile.

Other precious metals also advanced as investors rotated back into the sector, though the exact size of the gains varied during the trading session. Reuters said spot silver rose 2.2% to $69.54 an ounce, platinum gained 2.3% to $1,868.89 and palladium added 1.8% to $1,377.25 by late trading. A Saudi Press Agency dispatch, which reflected earlier market levels, put the gains higher at one stage, showing how sharp and fluid the day’s price swings were as traders responded to headlines and technical buying.

The market is now weighing two competing forces. On one side, any credible diplomatic movement in the Middle East could cool oil, ease inflation fears and restore appetite for riskier assets, which might cap gold’s upside. On the other, the same conflict has exposed how quickly investors return to bullion when volatility deepens and liquidity allows re-entry at lower levels. Commerzbank has already raised its year-end gold target to $5,000 an ounce from $4,900, arguing that the latest retreat may not last if the broader structural drivers of demand remain intact.