Gold Prices Hold Steady Amid Geopolitical Uncertainty
Gold prices traded mostly unchanged during Asian trading on Wednesday, remaining within a narrow range as investors grew cautious amid fading hopes for a U.S.-Iran peace agreement and awaited talks between U.S. President Donald Trump and Chinese President Xi Jinping.
Spot gold slipped 0.1% to $4,712.27 per ounce by 02:44 ET (06:44 GMT), while U.S. gold futures gained 0.6% to $4,721.22 per ounce.
Gold had declined 0.4% in the previous session as a stronger U.S. dollar and elevated inflation data pressured bullion prices.
Trump-Xi Talks and Iran Conflict in Focus
Market sentiment remained fragile after Trump stated earlier this week that negotiations with Iran were “on life support” following Tehran’s rejection of a U.S.-backed proposal aimed at ending the conflict and reopening the Strait of Hormuz.
The comments weakened optimism surrounding a potential ceasefire and kept geopolitical risks elevated across global markets.
The ongoing conflict has disrupted shipping activity through the Strait of Hormuz, one of the world’s most important oil transit routes. The disruption has fueled concerns over persistent energy-driven inflation and complicated the outlook for global interest rates.
Investors are also closely watching the May 14-15 summit between Trump and Xi in Beijing, where discussions are expected to include trade tensions, the Iran conflict, Taiwan, and global supply chains.
Strong U.S. Inflation Weighs on Gold
Gold has struggled to build upward momentum this week after hotter-than-expected U.S. inflation data boosted Treasury yields and strengthened the U.S. dollar, reducing the appeal of non-yielding assets such as bullion.
The U.S. Dollar Index rose another 0.1% on Wednesday after climbing 0.4% in the previous session.
Data released on Tuesday showed that U.S. consumer prices increased 0.6% in April, while annual inflation accelerated to 3.8%, the highest level since mid-2023. Rising energy prices linked to the Middle East conflict were a major contributor to the increase, while core inflation also exceeded market expectations.
Following the inflation report, investors largely ruled out expectations for Federal Reserve interest rate cuts this year, while expectations for another rate hike increased modestly.
Higher interest rates generally pressure gold prices because they increase the opportunity cost of holding non-yielding assets.
Markets Await More U.S. Inflation Data
Traders are now focusing on upcoming U.S. producer price index data expected later on Wednesday for additional signals regarding inflation trends and the Federal Reserve’s future policy direction.
Among other precious metals, spot silver gained 0.1% to $86.68 per ounce, while platinum declined 0.5% to $2,121.80 per ounce.
Meanwhile, benchmark copper futures on the London Metal Exchange rose 0.8% to $14,142.33 per ton, while U.S. copper futures traded mostly unchanged at $6.64 per pound.
