Bullion surged above $4,700 on Tuesday, a more than 2% jump, amid uncertainty over trade conflicts in Europe and the economy. The focus today is on US President Donald Trump's speech at the World Economic Forum in Davos, Switzerland.
At 9 am, gold prices were at $4,800, up 0.78% since it opened early Wednesday in Asian trading.
Investors are now shifting capital to safe havens amid escalating tensions between the United States (US) and Europe over the Greenland issue.
US President Donald Trump last weekend threatened to impose tariffs on eight European countries that reject his plan to take over the territory.
According to a BBC report on Wednesday, the European Parliament plans to suspend approval of a trade deal with the US that was agreed in July. A source close to the International Trade Committee said the decision is expected to be announced in Strasbourg, France.
The heightened tensions have the potential to boost demand for traditional safe-haven assets such as gold in the near term.
Meanwhile, traders are reducing expectations that the US Federal Reserve (Fed) will cut interest rates later this month, following stronger US labor market data.
The market is now expecting the next rate cut only in June, a month after Fed Chairman Jerome Powell's term ends, followed by another easing in the fourth quarter.
The view that the Fed will keep interest rates high for an extended period of time continues to support a stronger US dollar (USD), putting pressure on non-interest-bearing assets such as gold.
