Gold Gains Slightly, US-Iran Negotiations and Trump-Xi Agenda in Focus
Gold edged higher to around US$4,730 per ounce on Monday (May 11), reversing initial weakness and hitting a nearly three-week high.
This movement occurred as investors awaited developments in US-Iran negotiations, after US President Donald Trump quickly rejected Iran's response to a peace proposal, calling it "totally unacceptable."
Diplomatic uncertainty keeps the risk of conflict rising again, exacerbated by weekend attacks in the Middle East that again tested the ceasefire in place since early April. With Washington and Tehran still struggling to reach a resolution, the Strait of Hormuz is said to remain effectively blocked, keeping oil prices high and rekindling inflation concerns.
From a macro-transmission perspective, the potential for persistently higher inflation has prompted markets to trim expectations for monetary policy easing. Market participants are said to have reduced their expectations for two US interest rate cuts this year, with projections now split between limited easing and a scenario of no cuts at all in 2026.
The next focus will be on the US CPI release on Tuesday as a key indicator of short-term interest rate expectations, as well as Trump's two-day visit to China this week to meet with President Xi Jinping. The meeting's agenda, which is said to include Iran, Taiwan, AI, and nuclear weapons issues, has the potential to be a catalyst for sentiment across assets, especially if it signals a shift in geopolitical risk and the path of energy inflation.
Source: Newsmaker.id
