Gold prices ticked up on Thursday, as investors focused on talks between US President Donald Trump and his Chinese counterpart Xi Jinping, looking for signs of a resolution to the Iran war.
Spot gold inched up 0.4 per cent at $4,707.08 per ounce, as of 0732 GMT. US gold futures for June delivery rose 0.4 per cent at $4,713.80.
Benchmark 10-year US Treasury yields eased, lowering the opportunity cost of holding gold.
“Gold seems to be consolidating at the moment as everybody is looking at what’s going to happen in the high-level talks between the US and China,” said GoldSilver Central Managing Director Brian Lan.
“(Gold) is a bit downward-biased and I think that is also a window for investors who are looking to come into the metal,” Lan added.
China’s Xi Jinping told Trump that trade talks were making progress at the start of a two-day summit on Thursday but warned that disagreement over Taiwan could send relations down a dangerous path and even lead to conflict.
Trump is expected to seek China’s help to resolve the costly and unpopular conflict, which he launched with Israel in late February, but analysts say he is unlikely to get the support he wants.
Data on Wednesday showed that US producer prices posted their biggest increase in four years in April, boosted by soaring costs for goods and services, the latest sign of accelerating inflation.
The US Senate approved Kevin Warsh as chair of the Federal Reserve as the US central bank grapples with intensifying inflation that may make it hard to push through the interest-rate cuts that Trump has demanded.
Traders have largely priced out a Fed rate cut this year, with markets now seeing a 28 per cent chance of a hike by December, according to CME Group’s FedWatch tool.
While gold is considered a hedge against inflation, higher interest rates tend to weigh on the non-yielding metal.
Meanwhile, gold discounts in India widened to a record of more than $200 an ounce on Wednesday, as a surge in prices after an import duty hike triggered investor selling in an already weak demand environment, bullion dealers told Reuters.
Spot silver fell 0.7 per cent to $87.33 per ounce, platinum fell 0.5 per cent to $2,126.90, and palladium was down 0.1 per cent at $1,498.28.