Prices of gold and other precious metals rebounded from a sharp sell-off in the previous session on Tuesday as focus returned to persistent global risks that have propelled bullion to its strongest annual performance in more than four decades.
Spot gold was up 1.3% at US$4,387.29 per ounce at 1127 GMT. On Monday it posted its biggest daily percentage loss in more than two months in a retreat from Friday’s record high of US$4,549.71, which analysts blamed on profit taking.
US gold futures were up 1.3% at US$4,401.90. “The sell-off yesterday had the hallmarks of profit taking and repositioning ahead of the New Year…. buyers are likely returning as the structural conditions of this rally — a weaker US dollar and ongoing geopolitical uncertainty — still remain,” said Zain Vawda, analyst at MarketPulse by OANDA.
Bullion has climbed 66% this year, its biggest annual gain since 1979, fuelled by monetary easing, geopolitical tensions, central bank buying and rising holdings in exchange-traded funds.
The Federal Reserve will release minutes of its December meeting later on Tuesday, with traders currently pricing in two rate cuts next year. Non-yielding assets tend to do well in a low interest rate environment.
On the geopolitical front, Russia accused Ukraine of trying to attack President Vladimir Putin’s residence and vowed retaliation, denting prospects for a peace deal.
Silver rose 3.5% to US$74.78 per ounce. It hit an all-time high of US$83.62 on Monday before logging its biggest daily drop since August 2020, with analysts at Societe Generale also pointing to a move by the CME Group to raise its initial margin requirement for silver futures on Friday.