Gold prices rebounded on Wednesday, February 25, after a sharp decline in the previous session, yet the metal continued its recent pattern of volatility. By the close, the price had retreated significantly from its intraday peak.

Investors are concerned that the latest tariffs imposed by U.S. President Donald Trump could drive inflation higher. Additionally, upcoming talks between the United States and Iran on Thursday continue to support safe-haven buying interest. Gold is widely regarded as a hedge against inflation.

A softer U.S. dollar on Wednesday also provided support for gold. The U.S. Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, fell 0.2% to 97.69.

Notably, during the U.S. trading session, the gold price reached an intraday high of $5,217.78 per ounce. However, in late trading, it suddenly plunged by over $60 within just one hour. The price subsequently recovered somewhat from the lows to settle at $5,164.79 per ounce, trimming its daily gain to 0.40%, or $20.79.

The United States began imposing a provisional 10% tariff on a wide range of imported goods on Tuesday. White House officials indicated that the Trump administration is seeking to raise this rate to 15%.

On Tuesday evening local time, President Trump stated in his State of the Union address that the U.S. economy is strong and in a "golden age." He added that low interest rates would address housing issues, inflation is falling, wages are rising, and the economy is booming at an unprecedented pace.

Regarding tariffs, Trump asserted that he would continue to advance his tariff agenda despite a recent Supreme Court ruling that limits his authority. However, as new tariffs require Congressional approval, Trump's ability to impose additional tariffs is expected to be significantly constrained.

Trump expressed disappointment with the Supreme Court's decision, noting that "almost all" countries and companies prefer to maintain their existing tariff and investment agreements with Washington. When Trump mentioned the tariff ruling during his speech, Democrats responded with applause.

Markets are also focused on the resumption of talks between the U.S. and Iran in Geneva on Thursday. Trump used his address to lay out the case for potential military action against Iran, stating he would never allow the country to possess nuclear weapons. He claimed Iran is developing missiles capable of reaching the U.S. and suggested Tehran wants a deal but has not yet committed to abandoning its nuclear weapons program. Should the talks falter, renewed geopolitical tensions could spur further safe-haven buying.

Gold, which pays no interest, often performs well in a low-interest-rate environment and is considered a safe-haven asset during times of uncertainty. The price reached a record high of $5,594.82 per ounce on January 29 and has gained 20% year-to-date.

Bank of America noted in a report, "The pace of investor positioning in gold has slowed, leading us to expect prices could weaken during the spring. However, a renewed increase in tariff uncertainty could make the current consolidation period relatively short-lived." The bank also forecasts gold will surpass $6,000 per ounce within the next 12 months.

From a technical perspective, FXStreet analyst Christian Borjon Valencia pointed out that while the overall trend for gold remains upward, buyers need to push the price above this week's high of $5,249 per ounce to maintain the integrity of the pattern of higher highs and higher lows. A break above $5,249 could see traders target $5,300, followed by a test of the January 30 high of $5,451.

Valencia added that conversely, if the price fails to conquer the $5,249 level, a pullback could occur. Initial support is seen at $5,150. A break below that level would expose the February 24 low of $5,093, followed by the 20-day Simple Moving Average (SMA) at $5,033, with a potential test of the $5,000 level thereafter.