Gold Bounces Back in Volatile Market

By Praisebell Rosemond Larbi

Gold prices staged a strong rebound on Tuesday, climbing more than 3 per cent to trade above $4,820 an ounce, as investors moved back into the safe-haven asset following two consecutive sessions of heavy losses. The recovery reflects renewed bargain hunting amid lingering geopolitical uncertainty, even as concerns over tighter U.S. monetary policy continue to cloud the outlook.

The precious metal had come under intense pressure late last week, suffering its steepest one-day decline in more than a decade on Friday, before extending losses into Monday. At its lowest point, gold had fallen nearly 7 per cent from recent record highs, as investors rushed to reassess risk positions following shifts in U.S. political and monetary expectations.

Market sentiment was initially rattled by reports that U.S. President Donald Trump plans to nominate Kevin Warsh as the next Chair of the Federal Reserve. Warsh is widely regarded as a more hawkish policymaker, prompting fears that interest rates could remain higher for longer or even rise further if inflation risks re-emerge. Since gold offers no yield, higher interest rates tend to reduce its appeal relative to interest-bearing assets such as bonds.

However, Tuesday’s rebound suggests that investors are not ready to abandon gold entirely, particularly in an environment marked by political uncertainty, geopolitical risk, and uneven economic signals. Analysts said the sharp sell-off triggered significant profit-taking and forced liquidation, creating attractive entry points for longer-term investors and central-bank buyers.

Support for gold also came from easing trade tensions between the United States and India. President Trump announced a reduction in tariffs on Indian goods to 18 per cent, after Indian Prime Minister Narendra Modi agreed to halt purchases of Russian oil. The move helped defuse months of trade friction between the two countries, improving risk sentiment across global markets.

Geopolitical developments in the Middle East are also back in focus. High-level U.S.–Iran talks are scheduled for Friday, raising hopes of a de-escalation in tensions that have periodically threatened global energy supplies and regional stability. While any breakthrough could reduce safe-haven demand in the short term, analysts note that the talks themselves underscore persistent geopolitical uncertainty, which continues to underpin gold’s longer-term appeal.

Adding to market complexity, investors are navigating an unusual data vacuum in the United States. The ongoing partial U.S. government shutdown means that key labour market indicators, including the closely watched non-farm payrolls report, will not be released this week. The absence of fresh economic data has increased reliance on political developments and central-bank expectations to guide trading decisions.

Analysts say gold’s near-term direction will hinge on the balance between hawkish Federal Reserve expectations and global risk factors, including trade policy shifts, geopolitical negotiations, and signs of economic resilience or weakness. While volatility is likely to remain elevated, many market participants believe gold will continue to attract support as a hedge against policy uncertainty, debt concerns, and geopolitical shocks.

For now, the rebound highlights gold’s enduring role as both a speculative asset and a strategic store of value in an increasingly unpredictable global environment.