Gold Markets Stabilize During Trump-Xi Talks Amid Rising Inflation Concerns

Key Takeaways

• Bullion advanced 0.3% to approximately $4,700 during the opening of the two-day Trump-Xi diplomatic meeting
• Xi noted “positive progress” in trade discussions; Trump praised relations as “better than ever before”
• U.S. wholesale inflation surged at its quickest rate since 2022, capping gold’s advance
• India increased import levies on gold and silver from 6% to 15%, posing risks to physical consumption
• Kevin Warsh secured confirmation as Federal Reserve chair amid diminished expectations for rate reductions

Precious metals markets saw modest upward movement on Thursday as investors monitored a crucial diplomatic gathering between U.S. President Donald Trump and Chinese President Xi Jinping, though accelerating inflation prevented more substantial gains.

Spot bullion increased 0.3% to reach $4,700.25 per ounce during morning trade. U.S. gold futures contracts declined 0.2% to $4,697.97. The incremental advance followed two consecutive trading days of declines.

The two presidents convened in China for a two-day diplomatic summit that captured significant attention from commodity traders. Xi informed state-controlled media that trade discussions were achieving “positive progress.” Trump described Xi as “a great leader” and indicated U.S.-China relations would reach unprecedented heights.

Traders remained attentive to any indications regarding the continuing Iran conflict and its consequences for worldwide petroleum supplies. Iran and the U.S. have implemented blockades at the Strait of Hormuz, a critical shipping corridor responsible for transporting approximately one-fifth of global oil output. This supply disruption has elevated oil valuations beyond $100 per barrel.

Certain market observers speculated Trump might attempt to enlist China, a significant purchaser of Iranian petroleum, to facilitate a peace agreement. Whether Beijing would accept such a mediating position remains uncertain.

Rising Inflation Constrains Gold Momentum

Elevated oil prices have intensified inflationary pressures throughout leading economies. U.S. wholesale price indices climbed in April at their swiftest pace since 2022. Consumer inflation figures also exceeded forecasts, propelled by elevated energy expenses connected to the Iran situation.

The statistics strengthened projections that the Federal Reserve will maintain interest rates at elevated levels for an extended period. This represents a challenge for gold, which generates no income and typically struggles when rates remain elevated.

The U.S. Dollar Index maintained positions near a two-week peak following the inflation announcements. A robust dollar increases gold’s cost for international buyers using alternative currencies, potentially dampening purchasing activity.

The U.S. Senate additionally approved Kevin Warsh as the incoming Federal Reserve chair on Wednesday, succeeding Jerome Powell. Warsh assumes leadership during a period when the Fed confronts pressure from both inflation anxieties and Trump’s advocacy for interest rate reductions.

India Boosts Gold Import Levies

India revealed an increase in import tariffs on gold and silver, escalating from 6% to 15%. The policy aims to curtail the nation’s foreign purchases and bolster its foreign currency reserves.

India ranks among the globe’s largest gold-consuming markets, satisfying the majority of its requirements through international purchases. Gold and silver collectively represent approximately 11% of the country’s aggregate imports.

Research professionals at ING Group indicated the tariff escalation will probably diminish physical gold consumption in India during the immediate term, applying pressure to domestic purchasing patterns and import volumes.

Silver decreased 0.6% to $87.01 per ounce. Platinum slipped 0.4% to $2,128.60. Copper futures traded on the London Metal Exchange fell 1.3% to $13,953.33 per ton, retreating after reaching a peak of $14,191.48 per ton on Wednesday. Copper’s record high remains at $14,531.70 per ton, established in late January.

ING research teams observed that copper stockpiles beyond the U.S. continue at depressed levels, rendering prices vulnerable to any fresh demand surges.

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