Gold price back above $4,500 as Middle East tensions ease

Gold jumped more than 2% on Wednesday to extend this week’s gains, as investors sought opportunity in the yellow metal amid signs of easing Middle East tensions.

Spot prices briefly surged as much as 2.8% to $4,600 an ounce before settling back to the $4,500 level. Silver also saw similar gains, rising to almost $74 an ounce.

Bullion has come under pressure in recent weeks, as the war in the Middle East prompted investors to sell the metal, either to cover their losses in other assets or in anticipation of high interest rates due to inflationary pressures. During that period, gold has moved largely in tandem with stocks, losing over 13% during that time.

However, the rout came to a halt after US President Donald Trump announced on Monday that a temporary halt of military strikes on Iran and indicated talks to end the war have begun. Prices began to recover on Tuesday, snapping a rare nine-day losing streak.

Setback presents opportunity

“A reduction in investor positioning, reduced buying from the Middle East and expectations of rate hikes all weighed on gold,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note Wednesday.

“With some of these factors likely to reverse in the coming months, we view the current setback in gold prices as an opportunity to add positions,” he added.

The big buyers, namely central banks, are still in accumulation mode. The World Gold Council expects these institutions to keep adding to their holdings this year, forecasting another 850 tons in purchases, nearly matching that of 2025.

Investment demand

Research firm SP Angel noted that the recent volatility in gold prices stems from a significant ​rise in ⁠speculative investment flows in 2025. WGC data shows that global gold investment demand soared 84% last year to a record high of 2,175 tons, reflecting the large influx of investors.

“The recent pullback has seen a sharp exit of much of this capital. However, we see the recent trend of central bank reserve diversification as set to continue, ⁠with ​new entrants buying in 2026,” SP Angel analysts wrote.

Earlier this year, major banks including JPMorgan have given gold price targets of above $6,000 an ounce, citing the increase in private-sector investment interest.

Despite the recent selloff, the metal remains up 3.8% on the year, after rising more than 60% last year.