Gold extended its rally on Wednesday, adding to its strongest daily gain in 17 years, as investors sought safe-haven assets amid renewed U.S.–Iran tensions and mounting concerns over U.S. monetary policy independence.
Analysts said demand was being driven by a powerful mix of geopolitical stress and policy uncertainty. Questions surrounding the Federal Reserve’s independence and escalating Middle East risks have combined to bolster gold’s appeal as a defensive hedge.
At the same time, comments from U.S. President Donald Trump calling for a full investigation into Fed Chair Jerome Powell reignited concerns about political pressure on the central bank.
Gold’s rebound follows a sharp selloff earlier this week, when the metal fell nearly 10% over two days—its steepest drop in decades—after policy uncertainty and higher trading margins rattled investors. Despite the volatility, bullion is now up more than 17% year-to-date.
Attention is turning to upcoming U.S. labor data for clues on the Fed’s next steps. Markets are currently pricing in at least two rate cuts in 2026, a backdrop that typically favors non-yielding assets like gold.
Looking ahead, UBS analysts say easier monetary policy could push gold significantly higher by year-end. Silver also rebounded sharply, jumping 5.7% to $90 an ounce after hitting a one-month low earlier in the week.
