Gold Steady, Markets Digest Trump-Xi Summit and Inflation Risks
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 the Iran war. At 13:26 GMT, spot gold edged up 0.1% to US$4,695.08 per ounce, while gold futures fell 0.1% to US$4,701.05.
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 emphasized that US resistance on the Taiwan issue could further worsen relations between the two countries.
The market is primarily looking for signs regarding possible discussions on the Iran war, including speculation that Trump could push China, a major importer of Iranian oil, to act as a "guarantor" for a more durable peace deal. At the same time, the global economic outlook remains clouded as the closure of the Strait of Hormuz, a strategic waterway south of Iran that normally carries about a fifth of global oil flows, continues, while a dual Iranian and US blockade 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 increased inflationary pressures and fueled expectations that central banks could respond with higher interest rates, potentially limiting gold's performance as a non-yielding asset. In the US, the Senate confirmed Kevin Warsh as Federal Reserve Chair on Wednesday, replacing Jerome Powell, at a time when policymakers face price pressures that could make it difficult to cut interest rates aggressively.
Meanwhile, the US dollar has been flat, though it remains seen as a hedge against conflict, with some market participants viewing the US's position as a major energy exporter as providing a relative cushion against energy shocks from the Hormuz blockage.
Source: Newsmaker.id
