Gold stabilized on Wednesday after rebounding from a one-week low of $4640 per ounce, which it hit in the previous session. The yellow metal is currently trading below the daily pivot point at $4725, if it holds beneath this level, it could drop toward support levels at $4680 then $4654. On the upside, if the price breaks above the aforesaid pivot point, it could test resistance levels at $4750 then $4775.
Global markets remained cautious today, as investors monitored rising geopolitical tensions and fresh economic data from the United States. Attention was focused on the upcoming U.S.-China summit, where President Donald Trump is expected to discuss Iran with Chinese President Xi Jinping, while the U.S. dollar hovered near a one-week high amid growing demand for safe-haven assets. Meanwhile, newly released inflation data showed that U.S. consumer prices recorded their largest increase in three years, reinforcing expectations that the Federal Reserve could maintain higher interest rates for an extended period.
Market Watch
Trump to discuss Iran with Xi in U.S.-China summit
U.S. President Donald Trump is expected to hold talks with Chinese President Xi Jinping during a high-stakes U.S.-China summit in Beijing this week, with the ongoing Iran conflict emerging as one of the key topics on the agenda.
According to multiple international reports, Trump said before departing Washington that he plans to have a “long talk” with Xi regarding Iran, although he later downplayed the extent to which the issue would dominate discussions. The summit comes amid escalating geopolitical tensions in the Middle East, continued trade disputes between Washington and Beijing, and growing concerns over Taiwan and global energy markets.
Analysts say the Iran war and disruptions around the Strait of Hormuz have added pressure on both powers to maintain economic stability and avoid further escalation. China, one of Iran’s largest oil buyers, is expected to face renewed pressure from Washington to use its influence over Tehran.
The meeting marks Trump’s first official visit to China since returning to office and is widely viewed as a crucial moment for U.S.-China relations. Trade, artificial intelligence cooperation, tariffs, semiconductor restrictions, and regional security issues are also expected to be discussed during the summit.
Dollar wavers near one-week high
The U.S. dollar hovered near a one-week high on Wednesday as investors reacted to stronger-than-expected U.S. inflation data and rising geopolitical tensions in the Middle East.
The dollar index remained firm after U.S. consumer prices rose sharply in April, reinforcing expectations that the Federal Reserve could keep interest rates elevated for longer. Higher Treasury yields also supported the greenback, while investors continued to seek safe-haven assets amid uncertainty surrounding the Iran conflict and stalled ceasefire talks.
The euro and British pound both edged lower against the dollar in early trading, while the Japanese yen stabilized after recent volatility fueled speculation of possible intervention by Japanese authorities.
Market analysts said renewed concerns over energy prices and global inflation pressures helped strengthen demand for the U.S. currency. Brent crude oil prices stayed above the $100-per-barrel level as fears of supply disruptions in the Strait of Hormuz persisted.
Traders are now closely watching upcoming comments from Federal Reserve officials and developments from the U.S.-China summit, where President Donald Trump is expected to discuss Iran and global trade issues with Chinese President Xi Jinping.
U.S. inflation posts largest gain in three years
U.S. consumer inflation recorded its biggest annual increase in three years in April, as rising energy and food costs continued to pressure households and financial markets.
According to data released on Tuesday, the U.S. Consumer Price Index (CPI) rose 3.8% year-on-year, marking the highest inflation reading since May 2023. Monthly inflation increased by 0.6%, exceeding market expectations and reinforcing concerns that the Federal Reserve may keep interest rates elevated for longer.
Economists attributed much of the inflation surge to soaring energy prices linked to ongoing geopolitical tensions in the Middle East and disruptions surrounding the Strait of Hormuz. Gasoline prices jumped sharply over the past month, while food, transportation, and housing costs also increased.
Core inflation, which excludes volatile food and energy prices, climbed to 2.8% annually, indicating that underlying price pressures remain persistent across the broader economy.
Financial markets reacted cautiously following the report. U.S. Treasury yields rose, the dollar strengthened, and investors scaled back expectations for near-term Federal Reserve interest-rate cuts.
Analysts warned that continued instability in global energy markets could keep inflation elevated in the coming months, adding pressure on consumers and policymakers alike.
Looking Ahead
Markets are now awaiting the release of the U.S. Producer Price Index (PPI), a key inflation indicator that measures changes in wholesale prices. Investors will closely look at the data for further signals on inflation trends and the Federal Reserve’s future interest rate path, especially after stronger-than-expected consumer inflation figures earlier this week. The report could influence movements in the dollar, Treasury yields, and global equity markets.