Gold finally pulled back and rose 1 percent to $4,427.09 per ounce. This was the first normal day of gains. Silver gained 1 percent to $65.94, and platinum and palladium also rose.

The reason for the reversal was triggered by President Trump's statement that the recent attacks on Iran are likely to be short-lived. The oil rally stopped at that point; renewed hostilities had earlier fueled fears of accelerating inflation, which is traditionally a headwind for non-yielding gold. The metal also received additional support from the currency market as the dollar stabilized after a sharp spike in the yen, leaving traders on alert for further action by Japanese authorities.

Notably, the monetary backdrop also shifted in a favorable direction. New York Federal Reserve President John Williams said on Wednesday that there is evidence of ongoing disinflation as the effects of tariffs fade and higher energy costs are not spilling over into other services. That cooled rate-hike expectations, a view further supported by the ADP data showing hiring slowed in August to 38,000 jobs, the weakest since January.

It is worth noting that technically the metal also recovered ground, moving back above the 100-day moving average, a medium-term benchmark for traders. Recall that just three days ago gold lost nearly 6 percent over three sessions and fell below the 200-day moving average, so the current rebound has reclaimed part of the losses.

The metal's year-to-date picture remains mixed despite the dramatic moves. Gold is only slightly above early-year levels after exceptionally volatile trading: a record in January, a four-month slump through June, then a recovery amid the Middle East conflict and attempts to assess whether the Fed will need to tighten policy. Ongoing central bank purchases provide some steady support. The next key development will come on Friday, when the official jobs report will either confirm the hiring weakness shown by ADP or reverse expectations back toward a September rate hike.

Regarding the current technical picture for gold, buyers need to reclaim the nearest resistance at $4,425. That would allow a target of $4,481, above which a breakout would become rather difficult. The most distant target is in the $4,540 area. If gold falls, bears will try to take control of $4,372. If they succeed, a break of that range would deliver a serious blow to bulls and push Gold toward the $4,304 low, with a further prospect of reaching $4,249.