Wild fluctuations in gold prices persisted on Wednesday as geopolitical tensions escalated following the U.S. downing of an Iranian drone.

The precious metal, which is seen as a so-called "safe haven" for investors in times of uncertainty, shot back above $5,000 (£3,650) an ounce following days of sharp falls, The Caspian Post reports, citing BBC.

Gold prices had been propelled to record highs by rapid changes in US trade policy, ongoing geopolitical uncertainty and conflict and central banks increasing their purchases of bullion.

Wednesday's jump, to $5,059 per ounce, left the price of gold around 80% higher than the same time a year ago.

A US military spokesman confirmed the Iranian drone had been shot down after it "aggressively approached" an American aircraft carrier in the Arabian Sea.

Tehran has not commented on Tuesday's incident.

Gold prices peaked at $5,500 in January but last Friday tumbled after US President Donald Trump nominated Kevin Warsh as chair of the Federal Reserve.

Warsh is viewed by investors as a relatively safe pick, calming concerns about the independence of the central bank following attacks by Trump against the current chair Jerome Powell and the pace of interest rate cuts.

Friday's drop, which saw the gold price fall 9%, was its biggest one-day decline since 1983.