Gold prices climbed back near $5,000 per ounce on Thursday, following a significant 2% surge the previous day. With some Asian markets closed for the Lunar New Year holiday, traders are closely monitoring the Federal Reserve's next moves regarding interest rates.

On Thursday, gold advanced by as much as 0.9%, while silver saw gains of up to 3%. Both precious metals have experienced unusually high volatility in recent months, particularly after a historic sell-off at the end of January.

The primary factor influencing the next major price movement for gold will be the path of U.S. interest rates. The minutes from the Fed's January 27-28 policy meeting, released on Wednesday, revealed that officials expressed unexpectedly cautious views on interest rate cuts during last month's discussions.

This cautious stance could potentially create friction between the Fed and President Donald Trump, and complicate the role for Kevin Warsh, Trump's nominee for Fed Chair. The President has consistently advocated for lower borrowing costs, and interest rate cuts are generally seen as a positive driver for non-yielding gold.

Supporting the U.S. dollar, which held most of its gains from Wednesday, were economic reports highlighting the resilience of the U.S. economy. Last month, U.S. industrial output recorded its largest increase in nearly a year, and a separate report showed orders for core capital goods in December rose more than anticipated.

Financial institutions including BNP Paribas, Deutsche Bank, and Goldman Sachs Group project that gold will resume its upward trend. They note that the fundamental factors that have supported the multi-year bull run in gold prices remain intact. Concerns about the Federal Reserve's independence and ongoing geopolitical tensions continue to provide underlying support for the metal.

Traders are also watching developments in the Middle East. U.S.-Iran nuclear talks have so far failed to yield substantial results. Following talks in Geneva this week, a U.S. official stated that Iranian officials would return in two weeks with detailed proposals to bridge the gaps between the two sides. Concurrently, U.S. news outlet Axios reported that any potential U.S. military action could evolve into a campaign lasting several weeks.

As of 9:50 AM London time, spot gold was up 0.5% at $5,004.32 per ounce. Silver advanced 2% to $78.78 per ounce, while platinum was largely unchanged and palladium registered a slight decline.