Trump-Xi Raise Risks, Gold Under Further Pressure
Gold prices (XAU/USD) weakened and remained below $4,655, as a strengthening dollar and rising US bond yields put further pressure on non-yielding assets.
Pressure came from a combination of US data that still showed resilient demand and resurgent inflation. April retail sales rose 0.5% and initial jobless claims reached 211,000, encouraging the market to maintain expectations of a tighter interest rate policy for longer.
The dollar also strengthened, with the DXY holding around 98.78 (a two-week high), in line with rising yields following the series of inflation data. This situation narrows the recovery potential for gold as the opportunity cost of holding gold increases when returns on yielding assets rise.
On the inflation front, energy pressures remain a key channel. Previous data showed PPI rising 6% YoY and CPI 3.8% YoY, making the market increasingly skeptical about the possibility of an interest rate cut in the near term.
Meanwhile, risk sentiment improved amid the Trump-Xi meeting in Beijing. Trump said China had agreed to buy 200 Boeing aircraft, and the US also approved the sale of Nvidia H200 AI chips to around 10 Chinese companies—factors that reduced the safe-haven appeal of gold as equities rallied.
In the Middle East, US-Iran negotiations remain stalled, keeping tensions high, but markets appear more focused on the transmission of inflation and interest rates than pure risk-off. The focus next shifts to the release of the Empire State Manufacturing Index and further comments from Fed officials to test whether the "higher for longer" narrative continues to gain ground. (Arl)*
Source: Newsmaker.id
