Gold Recovers Quickly After Sharp Sell-Off: What's Next?

Gold prices saw a notable rebound during Tuesday's trading session, following a sharp sell-off that lasted for two consecutive sessions, indicating a return of demand for the precious metal at lower levels.

Sharp Jump in Gold Prices Today

Gold prices rose by more than 5% during today's session, reaching approximately $4,920 per ounce at the time of writing, supported by strong buying activity at levels deemed attractive by investors after the recent declines.

Gold had fallen by about 5% in the previous session, continuing the decline that began last Thursday from its all-time high of $5,598 per ounce.

The precious metal also experienced its biggest daily drop in over a decade on Friday.

The sharp sell-off followed US President Donald Trump's announcement of his nomination of Kevin Warsh to head the Federal Reserve, which raised concerns in the markets about the possibility of a tighter monetary policy in the near future, temporarily putting pressure on gold.

Gold Demand Remains Strong

Despite recent volatility, gold has remained supported by strong fundamentals, most notably continued purchases by central banks worldwide, which have been a major driver of demand for the precious metal in recent years.

Global uncertainty, coupled with growing concerns about the independence of US monetary policy, has also bolstered gold's appeal as a safe haven for investors.

Will Gold Remain the Top Safe Haven?

Amid ongoing geopolitical tensions and global economic risks, gold is likely to remain the preferred choice for investors seeking safety, even with the potential for continued short-term volatility.

Therefore, any further declines could be viewed as buying opportunities by many medium- and long-term investors.