Gold inches higher above $4,650 amid Trump–Xi summit hopes

Gold price (XAU/USD) recovers some lost ground around $4,660 during the early Asian session on Friday. However, the potential upside for the precious metal might be limited as the prospects of US rate cuts have largely faded. Traders will closely monitor US President Donald Trump's meeting with Chinese President Xi Jinping in Beijing.

Trump and Xi called for a better US-China relationship on Thursday as they began a two-day summit likely to cover issues ranging from tariffs to artificial intelligence. Xi reportedly told the US business leaders their companies could be “deeply involved in China's reform and opening up” and that “China's door will only open wider.” 

Trump said after Thursday’s meetings that Xi offered help to resolve the conflict and pledged not to provide military equipment to Iran.  Xi also wants to see the critical Strait of Hormuz reopened. 

“The market is trying to decipher the likelihood of a potential end to hostilities in the Middle East and the Strait of Hormuz reopening fully,” said Nicholas Frappell, global head of institutional markets at ABC Refinery. “Gold will get a boost from a softer dollar and less aggressive policy tightening from central banks if the Strait reopens,” Frappell added. 

US data released this week showed the US Producer Price Index (PPI) inflation accelerated to the fastest pace since 2022 in April, while the Consumer Price Index (CPI) rose the most since 2023. These reports have reinforced market expectations that the Federal Reserve (Fed) will maintain elevated interest rates to combat persistent inflationary pressures. It’s worth noting that Gold is often used amid geopolitical uncertainty but does not yield interest, making it less attractive when interest rates are high.