Gold Strengthens Ahead of Trump-Xi Summit, US Data Supports
Gold prices (XAU/USD) rose in early European trading on Thursday (May 14), as markets awaited the outcome of the meeting between US President Donald Trump and Chinese President Xi Jinping in Beijing. Investors' attention was also focused on the release of US Retail Sales data for April, scheduled for tonight.
According to a Bloomberg report, this visit will be the first state visit by a US leader to China in nine years, with the world's two largest economies attempting to stabilize relations amid the Iran conflict. Geopolitical uncertainty typically provides defensive support for gold.
On the trade front, the US and China are said to be considering a framework that would allow each country to identify approximately US$30 billion of goods on which tariffs could be reduced without compromising national security interests. If signs of stabilization in relations improve, risk sentiment could shift rapidly and also impact demand for safe-haven assets.
However, hotter US producer inflation data kept gold from gaining ground. US PPI rose 6.0% (YoY) in April from 4.3% in March, beating expectations of 4.9%. On a monthly basis, the PPI rose 1.4% from 0.7% and also exceeded the 0.5% forecast.
The rise in wholesale inflation, driven by surging oil prices related to Middle East tensions, reinforced expectations that US interest rates will remain high for longer. Gold often benefits from heightened uncertainty, but because it offers no yield, its appeal can diminish when interest rates are high.
5 key points:
- Gold strengthened ahead of the outcome of the Trump-Xi summit in Beijing, with the market awaiting further policy signals.
- US April Retail Sales data is the next catalyst for the direction of the dollar, yields, and risk sentiment.
- The US-China are considering a framework for tariff cuts for approximately US$30 billion of selected goods.
- US April PPI jumped 6.0% (YoY) and 1.4% (MoM), well above market expectations.
- Hotter inflation reinforces expectations that interest rates will remain high for longer, potentially limiting gold's upside despite favorable geopolitical risks. (asd)*
Source: Newsmaker.id
