Gold prices were little changed in Asian trade on Wednesday, with investors remaining cautious as hopes for a near-term peace agreement between the United States and Iran continued to fade ahead of scheduled talks between Donald Trump and Chinese President Xi Jinping.
Spot gold slipped 0.1% to $4,712.27 an ounce by 02:44 ET (06:44 GMT), while U.S. gold futures added 0.6% to $4,721.22 an ounce.
The precious metal had fallen 0.4% in the previous session as stronger U.S. inflation figures and a firmer dollar pressured bullion prices.
Markets monitor Trump-Xi meeting amid ongoing Middle East uncertainty
Investor confidence remained subdued after Trump said earlier this week that negotiations with Iran were on “life support” after Tehran rejected a U.S.-backed proposal intended to end hostilities and reopen the Strait of Hormuz.
The remarks weakened expectations for a near-term ceasefire and reinforced concerns over rising geopolitical risks.
The prolonged conflict has continued to disrupt shipping through the Strait of Hormuz, a crucial energy corridor through which roughly 20% of global oil supplies pass, heightening fears that elevated energy costs could keep inflation under pressure and complicate central bank policy decisions.
Investors are also closely watching the Trump-Xi summit scheduled for May 14-15 in Beijing. Discussions are expected to include trade tensions, Taiwan, the Iran conflict and broader supply-chain concerns.
Inflation and rising yields weigh on bullion
Gold has struggled to attract fresh buying this week after stronger-than-forecast U.S. inflation data pushed Treasury yields higher and supported the dollar, reducing demand for non-yielding assets such as bullion.
The U.S. Dollar Index rose 0.1% on Wednesday following a 0.4% gain in the prior session.
Data released Tuesday showed that U.S. consumer prices increased by 0.6% in April, while annual inflation accelerated to 3.8%, marking the highest reading since mid-2023. The rise was driven largely by surging energy prices linked to tensions in the Middle East. Core inflation also exceeded market expectations.
Markets have now largely abandoned expectations for Federal Reserve rate cuts this year, while pricing for potential rate increases edged slightly higher.
Higher interest rates typically pressure gold because they raise the opportunity cost of holding assets that do not generate income.
Traders are now awaiting U.S. producer price data due later Wednesday for further insight into inflation trends and the likely path of Federal Reserve policy. Expectations for rate reductions this year have continued to decline.
Silver mixed while copper prices rise
Elsewhere in metals markets, spot silver gained 0.1% to $86.68 an ounce, while platinum fell 0.5% to $2,121.80 an ounce.
Benchmark copper futures on the London Metal Exchange rose 0.8% to $14,142.33 per ton, while U.S. copper futures traded broadly unchanged at $6.64 per pound.
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