In Brief:
- Gold rebounded towards $4,900 after briefly dipping near $4,400 during Monday’s sharp sell-off.
- Profit-taking followed the nomination of Kevin Warsh as Fed chair, easing safe-haven demand.
- Physical buying and central bank demand continue to support gold despite recent volatility.
Gold (XAU/USD) has stabilised after several volatile sessions and is edging back toward the $5,000 level following a sharp correction earlier in the week.
The metal briefly slipped to around $4,400 on Monday after falling more than 12% on Friday, wiping out nearly $1,200 from recent record highs. Prices have since settled, with spot gold recovering to $4,896 by 11:20 GMT.
Heavy profit-taking hit metals after US President Donald Trump nominated former Federal Reserve governor Kevin Warsh as the next Fed chair.
The announcement removed a major source of uncertainty, cooling safe-haven demand, while also raising expectations that monetary policy may be less accommodative than markets had anticipated.
Even so, signs of stabilisation emerged late on Monday, with gold closing well above its intraday lows. The rebound suggests selling pressure from leveraged positions may be easing.
Physical buying has remained strong in recent months and could help absorb ongoing selling from institutional players, while central bank purchases are expected to stay firm amid strained international relations and lingering concerns over Federal Reserve independence and higher risk premiums on US assets.
Attention had been on this week’s US nonfarm payrolls report for guidance on the economic outlook and interest rate path. That release has now been postponed due to the partial US government shutdown, removing a near-term catalyst for markets.
Cooling tensions between the United States and Iran have also eased some safe-haven demand. Tehran and Washington are set to resume talks over Iran’s nuclear programme on Friday after weeks of heightened rhetoric.
For now, markets appear calmer, equities are rebounding, bitcoin has lifted modestly from recent lows, and precious metals are clawing back some ground after an intense bout of selling.