• Gold rebounded as investors sought safety following a slump in global stocks due to concerns around elevated valuations.
• Spot bullion rose toward $4,000 an ounce, after falling almost 2% in the previous session as the US dollar strengthened.
• Gold rose 0.8% to $3,965.04 an ounce as of 10:28 a.m. in London.

Gold rebounded as investors sought safety following a slump in global stocks due to concerns around elevated valuations.

Spot bullion rose toward $4,000 an ounce, after falling almost 2% in the previous session as the US dollar strengthened. Treasuries also rallied, while global stocks extended their steepest drop in nearly a month in the previous session.

Gold’s drop on Tuesday came as a trio of Federal Reserve policymakers stopped short of supporting an additional interest-rate cut in December as they weighed competing risks from inflation and a softer labor market. Investors will have an opportunity to hear more viewpoints this week, including from St. Louis Fed President Alberto Musalem. Lower borrowing costs boost the appeal of gold relative to interest-bearing assets like bonds.

Gold is about 50% higher year-to-date, after prices touched a record last month before retracing some gains. The pullback — which followed a slew of signals that the ascent had been too rapid — was accompanied by withdrawals from bullion-backed exchange-traded funds. Traders are now trying to assess whether the metal’s drop has run its course.

“It should not be a big surprise to see the yellow metal consolidate in a lower, $3,800-to-$4,050-an-ounce trading range,” TD Securities strategist Bart Melek said in a note, citing factors including ambiguities over the outlook for Federal Reserve rate cuts, as well as concerns over retail buying in China.

Still, the factors that contributed to gold’s gains this year are still mostly intact, and elevated buying by global central banks and strong demand from private investors should send prices back up after the consolidation phase, he added.

“The tone during this time has shifted from exuberance to reflection, with traders reassessing how much of the 2025 narrative — rate cuts, fiscal stress, geopolitical hedging, and central bank demand — has already been priced in,” Ole Hansen, commodities strategist at Saxo Bank A/S wrote in a note.

Gold rose 0.8% to $3,965.04 an ounce as of 10:28 a.m. in London. The Bloomberg Dollar Spot Index was steady after closing at the highest level since mid-May. Silver was up 1.2%%, platinum was little changed, while palladium edged higher.

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