Gold (XAU/USD) traded in positive territory near $4,700 during the early Asian session on Thursday, as investors turned cautious ahead of the summit between US President Donald Trump and Chinese President Xi Jinping in Beijing. This meeting marks the first state visit to China by a US leader in nine years and comes amid efforts by the world's two largest economies to stabilize ties, set against the backdrop of the Iran war. Additionally, the US April Retail Sales report is anticipated later on Thursday, which could further influence market sentiment [1].
Bloomberg reported that the US and China are considering a framework to allow each nation to identify approximately $30 billion in goods on which tariffs could be reduced, provided national security interests are not threatened [1]. Meanwhile, data from the US Bureau of Labor Statistics showed that the US Producer Price Index (PPI) surged by 6.0% year-over-year in April, up from 4.3% in March and exceeding the expected 4.9%. On a monthly basis, PPI inflation rose to 1.4% in April from 0.7% in March, significantly higher than the anticipated 0.5%. This marks the highest wholesale inflation since December 2022, driven by rising oil prices linked to Middle East tensions. The report has reinforced expectations that the US Federal Reserve will maintain elevated interest rates to combat persistent inflation, a factor that could weigh on gold, which does not yield interest [1].
Silver (XAG/USD) also extended its rally for the sixth consecutive day on Wednesday, rising over 1.30% and closing at $87.67 a troy ounce. Despite concerns that persistent US inflation could prevent the Federal Reserve from cutting interest rates, silver prices approached the $90.00 mark. Technically, silver remains neutral to upward-biased, with buyers attempting to challenge the $89.50 area for the first time since mid-March, though the metal peaked at $89.38 before retreating below $88.00. The Relative Strength Index (RSI) indicates bullish momentum, nearing overbought territory. If silver clears $89.50, it could target $90.00, with further resistance at the March 2 high of $96.62 and then $100.00. On the downside, support lies at $83.06, with further levels at the 100-day SMA ($81.11), 20-day SMA ($77.76), and 50-day SMA ($77.09) [2].
Both gold and silver are benefiting from their safe-haven status amid geopolitical uncertainty and inflationary pressures. However, the prospect of higher-for-longer US interest rates poses a potential headwind, particularly for gold, which is less attractive in a high-rate environment [1][2].
CONCLUSION
Gold and silver prices are rising as investors seek safe-haven assets amid geopolitical tensions and persistent US inflation. While both metals show strong momentum, the outlook is tempered by expectations that the Federal Reserve will keep interest rates elevated, which could limit further gains, especially for gold.