Gold made a modest recovery on Wednesday after dipping to $4,840, trading at $4,953 by 13:45 GMT, just $47 below the $5,000 mark.
The rebound comes amid thin liquidity conditions caused by market holidays in China, leaving metals sensitive to news flow.
Geopolitical developments offered tentative support, with reports that Washington and Tehran agreed on broad guiding principles in their discussions providing some optimism while caution remains over next steps.
In Eastern Europe, Ukrainian and Russian negotiators met for a second day of US-mediated talks in Geneva after a tense first day, with Russia pressing for full control of Ukraine’s eastern Donetsk region and Ukraine demanding security guarantees before agreeing to any deal, while President Volodymyr Zelensky told Axios he was under pressure from Washington to compromise.
Investors are also focused on a busy US economic calendar, with Redbook retail data, industrial production figures and the Federal Open Market Committee minutes due on Wednesday.
While the Fed’s January policy meeting minutes could offer insight into potential monetary easing and the personal consumption expenditures (PCE) price index for December, due Friday, remains the key inflation gauge shaping interest-rate expectations.
Higher interest rates generally weigh on non-yielding assets like gold, while expectations of policy easing tend to support prices. With geopolitical uncertainty and upcoming US economic releases, the market remains in a cautious holding pattern.