Gold prices traded positively in the $4,700 area as investors are now cautious ahead of the summit between US President Donald Trump and Chinese President Xi Jinping in Beijing. Economic focus will shift to the US Retail Sales report for April.
At 9.20 am, gold prices were trading at $4,692, up 0.7% since it opened in early trading Thursday in the Asian session.
President Donald Trump's visit to Beijing on Wednesday attracted global attention as it was the first state visit by a US leader to China in nine years.
The meeting came as the world's two largest economies are trying to stabilize trade and geopolitical relations amid escalating Iran war tensions.
Bloomberg also reported that the US and China are considering a new framework that would allow the two countries to identify around $30 billion worth of goods to receive tariff reductions.
The move is seen as an effort to ease trade pressures without compromising their respective national security interests.
In other developments, the latest data from the US Bureau of Labor Statistics showed that the US Producer Price Index (PPI) jumped to 6.0% year-on-year in April compared to 4.3% in March. The reading far exceeded market expectations of 4.9%.
On a monthly basis, PPI inflation rose to 1.4% from 0.7%, beating forecasts of 0.5%.
The increase in wholesale inflation was the highest since December 2022 and was largely influenced by a surge in oil prices following tensions in the Middle East. The situation put pressure on global markets as high energy costs began to increase the risk of longer-term inflation.
Although the US inflation data initially caused gold prices to decline, the precious metal quickly recovered to pass the $4,700 per troy ounce level. The move shows that investors still see gold as a safe asset and store of value as geopolitical uncertainty and global inflationary pressures continue to rise.
At the same time, the strong inflation report also reinforced expectations that the Federal Reserve will keep interest rates high to curb price pressures.
This situation usually poses a challenge for gold because the metal does not offer interest returns, making it less attractive when interest rates are high.
