Spot gold climbed 1.8% to $1,945.27 per ounce by 11:03 am EDT (1503 GMT), having dipped as much as 2.5% earlier. US gold futures rose 0.4% to $1,954.30.
On Tuesday, gold crashed as much as 6.2% in its worst one-day fall since April 2013, while silver slumped 15%, its biggest decline since October 2008, and was now 4.2% higher at $25.83.
“That decline was a healthy correction, it allows more people to get in, so prices will rally again and by the end of the year we’ll see new all-time highs with gold at $2,500 per ounce and silver at $35,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.
“We have all the same fundamental factors that supports gold… the US Federal Reserve is going to remain dovish for an extended period of time, they have already said that they will allow inflation to rise above their targets.”
Large stimulus measures tend to support gold, which is often considered a hedge against inflation.
Concerns over the economic damage caused by the pandemic as Britain’s economy shrank by a record 20.4% in the second quarter buoyed gold’s appeal along with a weaker dollar, which slid 0.3%.
“The global economy still faces a host of problems which have the capacity to support gold,” James Steel, chief precious metals analyst at HSBC said in a note.
“This includes geopolitical risks and ongoing monetary and fiscal stimulation. These factors will cushion further declines.”
All eyes are on a US coronavirus aid after talks between White House and top Democrats in Congress broke down last week.
Elsewhere, platinum rose 0.5% to $934.56 per ounce, while palladium gained 1.1% to $2,113.50.