Gold slips as firm US inflation data weighs on Fed rate-cut hopes

Gold prices extended losses on Wednesday as uncertainty in the Middle East and stronger-than-expected U.S. inflation data dimmed hopes for Federal Reserve rate cuts, with focus also on the Trump-Xi summit this week.

Spot gold fell 0.3% to $4,702.09 per ounce, as of 0423 GMT, retreating further from a three-week high in the last ession. U.S. gold futures for June delivery gained 0.5% to $4,710.70.

“Inflation data out of the U.S. has really watered down hopes, if not extinguished them, that there will be rate cuts rom the Fed, and now the markets are kind of pricing in that the next move could be a hike as soon as the end of the year.

So it kind of puts some downward pressure on gold,“ said Kyle Rodda, a senior financial market analyst at Capital.com.

Data showed that U.S. consumer inflation increased further in April, with the annual rate posting its largest gain in three years, further reducing hopes that the Fed will cut interest rates this year.

Traders have largely priced out a Fed rate cut this year, with markets now seeing a 30% chance of a hike by December, according to CME Group’s FedWatch tool.

Investors are looking ahead to the Producer Price Index, scheduled for release later in the day, and a meeting between U.S. President Donald Trump and Chinese President Xi Jinping in Beijing, scheduled to run from Thursday to Friday.

Trump said on Tuesday he does not think he will need China’s help to end the war with Iran, even as hopes for a lasting peace deal dwindled and Tehran tightened its grip over the Strait of Hormuz.

Meanwhile, Indian gold and silver futures jumped after New Delhi raised import tariffs on the metals to 15% from 6% as part of efforts to curb overseas purchases and ease pressure on the country’s foreign exchange reserves.

Spot silver rose 0.2% to $86.68 per ounce, after hitting its highest level since March 11 earlier in the session. Platinum slid 1% to $2,106, and palladium was steady at $1,490.86.