Gold (XAU/USD) holds firm on Thursday, remaining confined within a week-old trading range as investors closely monitor a high-stakes meeting between US President Donald Trump and Chinese President Xi Jinping, while US-Iran negotiations remain in limbo.
At the time of writing, XAU/USD is trading little changed around $4,700 after climbing to a three-week high near $4,773 on Tuesday
Buyers are showing little conviction to push XAU/USD higher as expectations that the Federal Reserve (Fed) will keep interest rates elevated for longer continue to weigh on sentiment. The view was further reinforced by the latest US inflation data, which showed elevated energy costs linked to the ongoing Middle East war continued to pressure both consumers and producers for a second straight month. Hotter-than-expected inflation data, combined with a somewhat stable labor market, suggest the Fed can afford to remain patient before adjusting policy settings.
However, traders have increased bets that the US central bank could deliver a rate hike by year-end. The hawkish repricing has pushed US Treasury yields and the US Dollar (USD) higher, keeping upside moves in the non-yielding metal limited. At the same time, lingering uncertainty surrounding the US-Iran negotiations is providing additional support to the Greenback.