Gold advanced on Wednesday as a softer dollar and renewed trade-policy uncertainty reinforced safe-haven flows, while escalating Middle East tensions added a geopolitical risk premium. After recovering from a sharp correction earlier this month, bullion has stabilized above the psychologically significant $5,000 level, signaling that structural drivers behind its multi-year rally remain intact despite intermittent volatility.

Tariff Uncertainty Reignites Safe-Haven Bid

Gold climbed as much as 1.3% during the session, reversing part of the prior day’s 1.6% decline. Prices rose 0.8% to $5,187.23 per ounce in afternoon Asian trading, while the Bloomberg Dollar Spot Index slipped 0.2%, making bullion more attractive to non-dollar buyers.

Market participants continue to assess the implications of President Donald Trump’s 10% broad-based import levy, which came into effect following a Supreme Court ruling that invalidated earlier reciprocal tariffs. Although Trump has floated raising the tariff rate to 15%, no formal directive has yet been issued. Meanwhile, additional national security investigations into imports such as batteries and industrial chemicals suggest further trade friction could emerge.

The possibility of tariff refunds — as some importers seek repayment of previously collected duties — has also stirred debate over fiscal implications. A reversal of tariff revenues could widen the U.S. budget deficit, potentially pressuring Treasuries and the dollar. Such dynamics support the so-called “debasement trade,” where investors shift capital from fiat assets toward hard commodities like gold.

Geopolitical Risk Reinforces Bullion’s Floor

Beyond trade tensions, markets remain focused on U.S.-Iran nuclear negotiations and the American military buildup in the Middle East. Heightened geopolitical uncertainty has historically underpinned demand for gold as a hedge against systemic risk.

The metal has now recovered more than half of the losses from its historic two-day rout at the start of the month. Analysts suggest that sustained tariff volatility and Iran-related tensions could catalyze a broader breakout if momentum builds above recent consolidation levels.

Other precious metals also posted strong gains. Silver rose 3.8% to $90.47, platinum jumped 4.8%, and palladium advanced 0.9%, reflecting broad-based strength across the complex.

Interest Rate Outlook Adds Complexity

Despite supportive macro drivers, monetary policy expectations present a counterbalance. Federal Reserve officials have signaled caution about cutting rates, citing resilient labor market data. A prolonged pause in rate reductions could temper upside for non-yielding assets such as gold, as higher real rates generally reduce bullion’s relative appeal.

Minutes from the Fed’s January meeting indicated policymakers remain wary of easing prematurely. Boston Fed President Susan Collins recently suggested rates may remain unchanged for some time, reinforcing the higher-for-longer narrative.

The interplay between fiscal uncertainty, geopolitical risk, and monetary policy will determine gold’s next directional move. For now, the metal appears anchored above $5,000, supported by structural demand from investors seeking diversification amid policy volatility.

Looking ahead, traders will monitor developments in U.S. trade enforcement, Iran negotiations, and Fed communication for clues on whether gold’s rebound transitions into a sustained breakout or remains range-bound within elevated levels.