Gold prices traded in a narrow range around the US$4,700 level during Asian trade on Thursday as investors weighed stronger United States inflation data, rising expectations for tighter monetary policy and developments from the meeting between U.S. President Donald Trump and Chinese President Xi Jinping.
By 3:30 pm AEST (5:30 am GMT), spot gold was up 0.3% at US$4,700.72 an ounce.
The precious metal has struggled to establish a clear direction this week as renewed demand for the U.S. dollar offset safe-haven buying linked to ongoing geopolitical tensions and concerns surrounding the Iran conflict.
The U.S. dollar remained near weekly highs against major currencies as traders increased bets that the Federal Reserve may need to raise interest rates again this year in response to accelerating inflation pressures.
Recent U.S. inflation data reinforced those expectations, limiting upside momentum in non-yielding assets such as gold.
The latest consumer price index (CPI) and producer price index (PPI) reports highlighted the inflationary impact of elevated energy prices resulting from the conflict in the Middle East.
U.S. consumer prices rose 3.8% in the 12 months to April, marking the strongest annual increase since May 2023. Meanwhile, annual producer price inflation accelerated to 6%, the largest increase since December 2022, following a 4.3% rise in March.
Markets are now closely focused on the outcome of the Trump-Xi summit in Beijing, with investors looking for signs of progress on trade relations and broader geopolitical tensions.
Although both leaders are expected to prioritise trade and export control discussions, any developments related to the prolonged Iran conflict could trigger significant moves across global financial markets, including gold.
Beyond geopolitics, investors are also awaiting the release of U.S. retail sales data for April, which could provide further insight into the strength of the American economy and influence expectations for future Federal Reserve policy.
