By: Economy Middle east

The upward trend for gold prices continued on Wednesday as instability in the Middle East and stronger-than-expected U.S. inflation data reduced hopes for Federal Reserve rate cuts. Market attention is also directed toward the Trump-Xi summit taking place this week. 

Spot gold saw a rise of 0.65 percent to reach $4,709.79 per ounce, as of 06:34 GMT, moving further from a three-week high reached in the last session. U.S. gold futures for June delivery gained 0.68 percent to hit $4,718.40.

Within the UAE, gold rates moved lower as of 10:34 Dubai time, with 24-carat and 22-carat gold dropping AED1.00 to AED566.25 and AED524.25 respectively. Prices for 21-carat fell AED0.75 to AED502.75. 18-carat gold decreased AED1.00 to AED430.75, while 14-carat gold slipped AED0.75 to AED336.00. Statistics revealed that U.S. consumer inflation rose further in April, with the annual rate posting its largest gain in three years, which has further diminished hopes that the Fed will cut interest rates this year.

Fed rate hike odds rise

Market participants have largely priced out a Fed rate cut this year, with markets now seeing a 30 percent 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.

At the same time, Indian gold and silver futures surged after New Delhi raised import tariffs on the metals to 15 percent from 6 percent as part of efforts to curb overseas purchases and ease pressure on the country’s foreign exchange reserves. Spot silver rose 2.06 percent to $86.72 per ounce, after hitting its highest level since March 11 earlier in the session. Platinum dipped 0.44 percent to $2,137.90, and palladium increased by 0.48 percent to $1,480.00.