Gold hovers around $5,000 an ounce amid geopolitical tensions, while Fed minutes limit further gains.

Gold prices were largely steady in Asian trade on Thursday, following a surge of more than 2% in the previous session. Momentum was restrained by thin Lunar New Year holiday liquidity, while investors weighed ongoing geopolitical tensions and mixed signals from the Federal Reserve.

Spot gold edged down 0.1% to $4,971.55 an ounce as of 20:51 ET (01:51 GMT), while U.S. gold futures fell 0.4% to $4,991.59.

The precious metal rallied 2.1% on Wednesday, briefly climbing above the $5,000-an-ounce mark and reclaiming most of its earlier weekly losses. However, subdued trading volumes across several major Asian markets amplified short-term volatility.

Geopolitical uncertainty continued to underpin demand for bullion. Market participants tracked rising friction between the United States and Iran, including concerns over security in the Strait of Hormuz and stalled nuclear negotiations. Limited headway in Russia-Ukraine peace talks also sustained broader risk aversion, supporting safe-haven flows into gold.

On the policy front, sentiment turned more cautious after minutes from the Federal Reserve’s latest meeting revealed differing views among officials on the interest-rate trajectory. Some policymakers warned that persistently high inflation could warrant further tightening, while others signaled scope for rate cuts later this year.

Expectations that U.S. rates may stay higher for longer bolstered the dollar and Treasury yields, creating headwinds for non-yielding gold after its sharp rally. The U.S. Dollar Index was flat after climbing 0.6% overnight in response to the Fed minutes.

Gold typically faces pressure when borrowing costs rise, as higher yields raise the opportunity cost of holding the metal. Investors are now focused on Friday’s U.S. personal consumption expenditures (PCE) price index data — the Fed’s preferred inflation measure — for clearer direction on monetary policy.

Sources: Ayushman Ojha