Spot gold was up 2.9% at US$5,082.94 per ounce, as of 8.13am, after surging nearly 6% yesterday, its biggest daily gain since November 2008.

Bullion scaled a record high of US$5,594.82 last Thursday.

US gold futures for April delivery climbed 3.4% to US$5,103.50 per ounce.

“The US military on Tuesday shot down an Iranian drone that ‘aggressively’ approached the Abraham Lincoln aircraft carrier in the Arabian Sea,” the US military said.

Gold is bouncing back from a low of US$4,403.24 touched on Monday after its biggest two-day sell-off in decades.

“After such a sharp rally, a correction was expected, it was not surprising and with gold coming back up, the fundamentals have not changed much,” ANZ analyst Soni Kumari said, adding that the geopolitical and economic backdrop remained mostly unchanged.

Goldman Sachs said today that it saw significant upside risk to its US$5,400 year-end forecast for gold on central banks maintaining their recent pace of accumulation alongside private investors stepping up gold ETF purchases.

“Going ahead … we are expecting the same US$5,600 levels (for gold) by the end of the first half or April-end while prices will continue to rise thereafter and our year-end target is US$6,000/oz,” said Jigar Trivedi, a senior research analyst at IndusInd Securities.

Spot silver rose 6.1% to US$90.34 an ounce. It touched a record high of US$121.64 on Thursday but fell to a month-low at US$71.33 on Monday having registered a record single-session price wipe-out of 27% on Friday.

Markets now await ADP private payroll data for more cues on the Federal Reserve’s policy path even as a partial US government shutdown has delayed the closely watched employment report for January.

Spot platinum added 5.6% to US$2,334.25 per ounce, while palladium gained 5.4% to US$1,826.21.