Spot gold rose 0.5% to $4,757.59 per ounce, while US gold futures for June delivery gained 0.8% to $4,768.20 an ounce. Spot silver also advanced 0.2% to $86.27 per ounce.
Market sentiment remained cautious after Trump said a ceasefire proposal involving Iran was “on life support,” indicating negotiations remain fragile.
Investors are also watching Trump’s scheduled China visit this week, where discussions with Xi are expected to cover a range of geopolitical and economic issues, including the ongoing West Asia conflict.
Oil prices also moved higher in Asian trade, reflecting concerns over potential supply disruptions if tensions in the region persist. Higher crude prices have added to inflation worries, leading markets to reassess expectations around US Federal Reserve interest rate cuts.
Investors are now awaiting the release of US Consumer Price Index (CPI) data later on Tuesday (May 12) for further clarity on the Federal Reserve’s policy path.
According to Ruchit Thakur, Market Analyst at VT Markets, gold prices are currently being driven by a mix of safe-haven demand and macroeconomic pressures.
He said central bank purchases, geopolitical uncertainty and higher oil prices continue to support bullion, while a stronger US dollar, elevated Treasury yields and expectations of prolonged higher interest rates are limiting gains.
Thakur added that markets are focused on real yields and Federal Reserve policy signals rather than geopolitical developments alone.
He noted that softer US inflation data, weaker labour market trends and a dovish Federal Reserve stance could support another leg higher in gold prices, while persistent inflation and delayed rate cuts may keep bullion range-bound.
Meanwhile, Sandip Raichura, CEO of Retail Broking and Distribution and Director at PL Capital, said Gold ETFs remain a preferred investment avenue for investors seeking exposure to gold without holding the physical metal.
Raichura said government measures over the years, including import duties and the promotion of Sovereign Gold Bonds, were aimed at reducing excessive physical gold imports because of their impact on India’s current account deficit. He added that Gold ETFs and Electronic Gold Receipts continue to remain policy-friendly as they encourage domestic gold recycling rather than fresh imports.
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