Gold prices were little changed during Asian trading on Wednesday, with bullion remaining stuck in a narrow range as investors adopted a cautious stance amid weakening hopes for a peace agreement between the United States and Iran and ahead of talks between 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 rose 0.6% to $4,721.22 per ounce.
Bullion had declined 0.4% in the previous session as the U.S. dollar strengthened and inflation readings in the United States came in above expectations.
Trump-Xi summit in focus as Middle East tensions persist
Investor 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.-supported proposal intended to end the conflict and reopen the Strait of Hormuz.
Those remarks reduced expectations for a near-term ceasefire and kept geopolitical risks elevated across financial markets.
The extended conflict has continued to disrupt shipping activity through the Strait of Hormuz, one of the world’s most strategically important oil transit routes, increasing concerns over persistent energy-driven inflation and complicating the outlook for global interest rates.
Markets are also watching the May 14-15 summit between Trump and Xi in Beijing, where discussions are expected to cover trade disputes, the Iran conflict, Taiwan and global supply chain issues.
Strong U.S. inflation data limits gold demand
Gold has struggled to build upward momentum this week after stronger-than-expected U.S. inflation data pushed Treasury yields higher and boosted the dollar, reducing the appeal of non-yielding assets such as bullion.
The U.S. Dollar Index rose 0.1% on Wednesday after climbing 0.4% during the previous session.
Figures released Tuesday showed that U.S. consumer prices increased 0.6% in April, while annual inflation accelerated to 3.8%, marking the highest level since mid-2023. The increase was largely linked to surging energy prices caused by tensions in the Middle East. Core inflation also exceeded forecasts.
Investors have now largely ruled out expectations for Federal Reserve interest-rate cuts this year, while market pricing for potential rate hikes increased modestly.
Higher borrowing costs generally weigh on gold because they increase the opportunity cost of holding non-interest-bearing assets.
Traders are now awaiting U.S. producer price index data later Wednesday for additional signals about inflationary pressures and the future direction of Federal Reserve monetary policy. Expectations for rate cuts later this year have continued to weaken.
Silver mixed, copper advances
Other precious metals traded mixed during the session. Spot silver edged up 0.1% to $86.68 per ounce, while platinum fell 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 were little changed at $6.64 per pound.