Gold, silver climb ahead of US inflation data, Trump-Xi talks
What's the story
Gold and silver prices rose on Tuesday as investors kept a close eye on West Asia developments, key US inflation data, and the upcoming meeting between US President Donald Trump and Chinese President Xi Jinping. Spot gold rose 0.5% to $4,757.59 per ounce while US gold futures for June delivery gained 0.8% to $4,768.2 an ounce.
Investor concerns
Ceasefire with Iran on life support: Trump
The market sentiment remained cautious after Trump said the current ceasefire with Iran was "on life support," showing that negotiations are still fragile. Investors are also looking forward to Trump's China visit this week, where talks with Xi will likely cover a range of geopolitical and economic issues, including the ongoing West Asia conflict.
Market fluctuations
Oil prices surge amid inflation concerns
Oil prices also rose in Asian trade amid fears of possible supply disruptions if tensions in the region continue. The rise in crude prices has fueled inflation concerns, prompting markets to reconsider their expectations for US Federal Reserve interest rate cuts. Investors are now looking forward to the release of US Consumer Price Index (CPI) data later today for more insight into the Federal Reserve's policy direction.
Market analysis
Analyst views on gold prices
Ruchit Thakur, a market analyst at VT Markets, said gold prices are currently being driven by a mix of safe-haven demand and macroeconomic pressures. He noted that central bank purchases, geopolitical uncertainty, and higher oil prices continue to support bullion. However, a stronger US dollar, elevated Treasury yields, and expectations of prolonged higher interest rates are limiting gains.
Investment trends
Physical gold vs Gold ETFs
Sandip Raichura, CEO of Retail Broking and Distribution and Director at PL Capital, said Gold ETFs remain a preferred investment avenue for those looking to invest in gold without holding the physical metal. He added that government measures over the years, including import duties and promotion of Sovereign Gold Bonds, were aimed at curbing excessive physical gold imports due to their impact on India's current account deficit.