Key Takeaways

• Gold edges down: Spot gold slipped 0.4% to $4,699.10 per ounce, while gold futures rose 0.4% to $4,706.72.
• Tuesday’s pullback: Bullion fell 0.4% in the previous session on a stronger dollar and hot inflation readings.
• Iran negotiations on “life support”: Trump’s warning continues to weigh on sentiment after Tehran rejected the U.S. peace proposal.
• Beijing summit looms: Trump and Xi will discuss trade tensions, Iran, Taiwan, and global supply chains this week.
• China as guarantor?: Analysts suggest Beijing — as a major Iranian crude buyer — could anchor a lasting peace deal.
• Tempered expectations: Some observers have dialed back hopes for a major breakthrough from the summit.
• Hormuz still shuttered: The strait closure continues to fuel energy-driven inflation fears worldwide.
• CPI shock: Hot April U.S. inflation data sent Treasury yields higher on rate hike fears.
• ING’s warning: “The Fed can’t cut here. And risk assets are pushing the boundaries of positivity.”
• PPI ahead: Producer price data due later Wednesday will offer more inflation clues.
• Rate cut bets pared: Traders have scaled back expectations for Fed cuts this year.
• Dollar firms: The DXY hovered near a one-week high, making gold pricier for foreign buyers.

Gold prices inched down on Wednesday, while the U.S. dollar firmed, as President Donald Trump made his way to China for a crunch summit against a backdrop of mounting uncertainty around the outlook for the Iran war.

Spot gold edged down 0.4% to $4,699.10 per ounce by 06:04 ET (10:04 GMT), while gold futures rose 0.4% to $4,706.72 per ounce.

Bullion fell 0.4% in the previous session, weighed down by a stronger greenback and elevated U.S. inflation readings.

Iran Talks Stall as Trump-Xi Summit Looms

Market sentiment remained fragile after Trump said earlier this week that negotiations with Iran were on “life support” following Tehran’s rejection of a U.S.-backed proposal aimed at ending the conflict and reopening the Strait of Hormuz.

The comments dampened optimism over a near-term ceasefire and kept geopolitical uncertainty firmly elevated.

Investors were focused on Trump’s summit this week with counterpart Xi Jinping in Beijing, where the two leaders are expected to discuss trade tensions, the Iran conflict, Taiwan, and global supply chains.

Analysts have suggested that China — as a major importer of Iranian crude — could be persuaded to act as a guarantor of a lasting peace deal, although some observers have dialed back expectations that such a breakthrough could come from the gathering.

Crucially, the more than two-month-old Iran war has disrupted shipping through the Strait of Hormuz — a key global oil transit route — fanning fears of sustained energy-driven inflation in countries around the world.

CPI Shock Reinforces Hawkish Fed Bets

These concerns were underscored by April U.S. inflation data released on Tuesday, which came in hotter than anticipated. U.S. Treasury yields rose in the wake of the report, as expectations grew that the Federal Reserve will respond to the price pressures by raising interest rates. Elevated borrowing costs can make non-yielding assets like gold less attractive.

“The rise in yields post the CPI release was through higher inflation expectations and higher real yields, and there was also an edge higher in the swap spread. All quite tame so far. More re-pricing rather than outright selling,” analysts at ING said in a research note.

“But it risks getting less tame ahead. The Fed can’t cut here. And risk assets are pushing the boundaries of positivity.”

Markets are now awaiting U.S. producer price index data due later on Wednesday for further clues on pipeline inflation pressures and the Federal Reserve’s policy path. Traders have scaled back their expectations for rate cuts this year.

Dollar Strength Caps Bullion

Meanwhile, the U.S. dollar index inched up on Wednesday, with the tracker of the greenback against a basket of currency peers hovering around a one-week high. A stronger dollar can take some of the sheen off gold by making the yellow metal more expensive for overseas buyers.