Gold Steady, Markets Digest Trump-Xi Summit and Inflation Risks from Iran War
Gold prices were relatively stable on Thursday (May 14) as investors pored over details of the meeting between US and Chinese leaders, which took place amid escalating geopolitical risks related to the Iran war. At 10:09 GMT, spot gold rose 0.2% to US$4,698.20 per ounce, while futures were barely changed at US$4,704.70.
The first round of talks at the two-day summit between US President Donald Trump and Chinese President Xi Jinping has concluded, with Xi telling state media that negotiations, particularly on trade, are showing progress. However, Xi also touched on potential friction over differences over Taiwan, which could further strain relations between the two countries.
The market is primarily awaiting any signals regarding the Iran war talks, including China's possible role as a major importer of Iranian oil in pushing for a more durable peace framework. This uncertainty coincides with the prolonged closure of the Strait of Hormuz, a vital waterway that normally carries about a fifth of global oil flows, while a dual blockade by Iran and the US has brought tanker traffic to a near standstill.
The surge in oil prices, well above pre-war levels of around US$70 per barrel, has added to inflationary pressures and raised expectations that central banks could respond with higher interest rates. This transmission has the potential to limit gold's appeal as a non-yielding asset, especially if markets begin to project tighter monetary policy. In the US, the Senate confirmed Kevin Warsh as Federal Reserve Chair on Wednesday, replacing Jerome Powell, at a time when policymakers are facing price pressures that could make it difficult to cut interest rates. Meanwhile, the US dollar has tended to be flat, although it remains viewed as a safe haven during the conflict, with some market participants viewing the US as a major energy exporter as relatively better protected from energy shocks resulting from the Hormuz disruption.
Source: Newsmaker.id
