Key Highlights
- Spot gold climbed 0.3% to approximately $4,700 during the opening of the two-day Trump-Xi summit
- President Xi reported “positive progress” in trade discussions; Trump praised relations as “better than ever before”
- U.S. producer price inflation accelerated to its quickest rate since 2022, constraining gold’s upward movement
- India increased import tariffs on gold and silver from 6% to 15%, potentially dampening physical demand
- Kevin Warsh received Senate confirmation as Federal Reserve chair amid ongoing rate cut uncertainty
Gold prices registered modest gains on Thursday as investor attention turned to a crucial meeting between U.S. President Donald Trump and Chinese President Xi Jinping, though accelerating inflation data prevented more substantial price advances.
Spot gold climbed 0.3% to reach $4,700.25 per ounce during morning trading hours. U.S. gold futures declined 0.2% to settle at $4,697.97. The marginal increase followed two consecutive trading sessions marked by price declines.
The presidents convened in China for a two-day diplomatic gathering that captured significant attention from commodity traders worldwide. Xi informed state-controlled media outlets that trade negotiations were demonstrating “positive progress.” Trump characterized Xi as “a great leader” and expressed confidence that U.S.-China relations would reach unprecedented heights.
Traders were simultaneously monitoring developments surrounding the Iran conflict and its ramifications for worldwide petroleum supplies. Both Iran and the United States have imposed blockades on the Strait of Hormuz, a critical maritime passage that facilitates approximately 20% of global oil transportation. This supply chain disruption has propelled oil prices substantially beyond the $100 per barrel threshold.
Several market observers speculated that Trump might attempt to enlist China, a significant purchaser of Iranian oil, in facilitating peace negotiations. Whether Beijing would embrace such a diplomatic role remains uncertain.
Rising Inflation Caps Gold Rally
Elevated oil prices have contributed to inflationary pressures throughout major global economies. U.S. producer price indicators surged in April at their most rapid pace witnessed since 2022. Consumer price measurements similarly exceeded projections, propelled by elevated energy expenses linked to the Iranian crisis.
These economic indicators strengthened market expectations that the Federal Reserve will maintain elevated interest rates for an extended period. This scenario presents challenges for gold, which generates no income yield and typically struggles when borrowing costs remain high.
The U.S. Dollar Index maintained levels close to a two-week peak following the inflation announcements. A strengthened dollar increases gold’s cost for international buyers using alternative currencies, potentially suppressing demand.
The U.S. Senate provided confirmation for Kevin Warsh as the incoming Federal Reserve chair on Wednesday, succeeding Jerome Powell. Warsh assumes leadership during a period when the Fed confronts competing pressures from inflationary trends and Trump’s advocacy for rate reductions.
India Implements Higher Gold Tariffs
India unveiled an increase in import tariffs for gold and silver, escalating from 6% to 15%. The policy adjustment seeks to curtail the nation’s foreign purchases and bolster its foreign exchange reserves.
India ranks among the globe’s premier gold-consuming markets, satisfying the majority of its requirements through international imports. Gold and silver collectively represent approximately 11% of the country’s aggregate import volume.
Analysts from ING Group projected that the tariff enhancement will probably diminish physical gold demand within India during the immediate term, creating downward pressure on domestic purchasing activity and import volumes.
Silver decreased 0.6% to $87.01 per ounce. Platinum retreated 0.4% to $2,128.60. Copper futures traded on the London Metal Exchange fell 1.3% to $13,953.33 per ton, retracing from Wednesday’s peak of $14,191.48 per ton. Copper’s record high remains at $14,531.70 per ton, established in late January.
ING analysts observed that copper stockpiles outside the United States continue at depressed levels, rendering prices vulnerable to any fresh demand surges.
