Gold prices rose above $5,000 an ounce again, after jumping 2% on Wednesday, as some Asian markets were closed for the Lunar New Year holiday and traders focused on the Federal Reserve's next move on interest rates.
The price of the precious metal rose by as much as 0.9% in thin trading on Thursday, as bargain hunters took advantage of the price dip after the metal posted its second day of gains. The market has remained highly volatile since the historic sell-off earlier this month, which saw gold prices plummet from a record high above $5,595.
Federal Reserve officials appeared surprisingly cautious about cutting interest rates when they met last month, according to the minutes of the U.S. central bank's January 27-28 monetary policy meeting, which were released Wednesday.
This could put the central bank on a collision course with Donald Trump, complicating the task for the president's nominee for Fed chair, Kevin Warsh. Trump has expressed support for lowering borrowing costs, which supports the price of the non-yielding metal.
The data confirms the strength of the US economy.
Meanwhile, the dollar held onto its gains after rising on Wednesday following data that confirmed the strength of the US economy. US industrial production rose last month at its fastest pace in nearly a year, while a separate report showed that core capital goods orders rose more than expected in December.
The Bloomberg Dollar Spot Index, a measure of the U.S. currency, rose 0.5% on Wednesday and was unchanged on Thursday.
Banks including BNP Paribas, Deutsche Bank and Goldman Sachs predicted that gold would resume its upward trend, with many of the factors that supported the multi-year rally remaining in place.
Concerns about the independence of the Federal Reserve, as well as a broader shift away from sovereign currencies and bonds, have supported the metal. Escalating geopolitical tensions have also boosted its appeal.
Stay tuned for developments in the Middle East
Traders are monitoring developments in the Middle East, where nuclear talks between the United States and Iran have so far remained inconclusive.
Following negotiations in Geneva this week, a US official said that officials from Tehran would return within two weeks with detailed proposals to address the gaps between the two sides, while a report by the US news website Axios stated that any US military operation would likely be a campaign lasting for weeks.
Spot gold rose 0.9% to $5,017.88 an ounce at 3:26 p.m. Singapore time. Silver climbed 2.5% to $79.16. Platinum and palladium prices also rose.
