Gold Pauses Two-Day Slide at $4,700

Gold hovered around $4,700 an ounce on Thursday, halting a two-day decline, as investors focused on the meeting between US President Donald Trump and Chinese President Xi Jinping. Trump stated that Xi had agreed to assist with Iran "with whatever" he needs, while Xi noted progress in trade talks but warned that disputes over Taiwan could strain relations and even risk conflict. Investors also digested US data showing both import and export prices surged more than expected last month, the largest increase since March 2022, driven by rising fuel import costs and nonagricultural export prices. Retail sales rose 0.5%, in line with forecasts. Following earlier hot consumer and producer price data, markets have priced out US interest rate cuts for this year, with a near 30% chance of a hike by December.

Gold held below $4,700 an ounce on Thursday after sliding for two straight sessions, as rising US inflation reinforced expectations that the Federal Reserve could keep interest rates higher for longer or even hike them. Data released Wednesday showed US wholesale inflation accelerated in April to its fastest pace since 2022, fueled by higher trade and energy costs linked to the Iran war. The report followed Tuesday’s data showing consumer inflation climbed to 3.8% last month, the highest reading since May 2023. Investors have now fully ruled out a Fed rate cut this year, while increasingly expect a greater likelihood of another rate hike before year-end. Although gold is traditionally viewed as a hedge against inflation, higher interest rates tend to pressure the non-yielding asset. Meanwhile, markets are also closely watching President Trump’s visit to China for signs of progress on the fragile trade truce and developments surrounding the Iran conflict.

Gold prices fell for a second straight session on Wednesday, slipping to $4,680 an ounce, as rising inflation dimmed expectations for interest rate cuts, while markets are also closely watching the upcoming Trump-Xi meeting. US producer prices surged more than expected in April, marking their biggest gain since early 2022, driven by higher trade and energy costs amid the Iran war. This followed Tuesday’s report showing consumer inflation accelerated to 3.8% last month, the highest since May 2023, leading investors to price out a US rate cut this year, according to CME Group’s FedWatch. While gold is often seen as an inflation hedge, higher interest rates typically weigh on the non-yielding metal. Additionally, India raised import tariffs on gold and silver to 15% from 6%, further dampening demand. Meanwhile, US President Donald Trump’s visit to China will be monitored for any progress on the fragile trade truce and the Iran conflict.