What’s behind the latest rise in gold prices?
The key driver for gold prices this week has been the cautious reaction to Tuesday’s announcement of a U.S.-China trade framework. While the deal is meant to build on an earlier agreement made in Geneva, it lacked specific details and has yet to be approved by U.S. President Donald Trump and Chinese President Xi Jinping.
U.S. Commerce Secretary Howard Lutnick described the plan as a way to “put meat on the bones” of last month’s preliminary deal. Still, markets remained skeptical, as no timelines or clear terms were made public.
Zain Vawda, a market analyst at OANDA, noted that “any positive developments from the talks could provide headwinds for gold prices while a stalemate in talks is likely to renew the precious metal’s appeal.” He also highlighted that gold recently broke out of a technical bear flag pattern, which is often seen as bullish—unless, of course, the trade outlook improves, in which case the momentum could reverse.
How are U.S. tariffs and court rulings adding to gold’s appeal?
Adding another layer of uncertainty, a U.S. federal appeals court ruled on Tuesday to keep Trump’s trade tariffs in place for now. These “liberation day” tariffs—targeting key trade partners—are set for implementation by early July unless overturned. The court’s move means these tariffs may continue affecting global trade and price stability.
With the prospect of tariffs pushing up costs on imported goods, investors turned to gold as a safer store of value. Historically, gold performs well during periods of inflation and trade tension.
Will today’s U.S. CPI inflation data move gold prices again?
All eyes are now on the U.S. Consumer Price Index (CPI) inflation data set to be released later today. The market expects May’s inflation reading to show a slight uptick, continuing the sticky inflation trend seen through most of 2025. Rising inflation tends to weaken the dollar and boost gold prices, as investors look for assets that hold value over time. A dip in the U.S. dollar—already down ahead of the CPI release—has also helped gold edge higher this morning.
How is China impacting the global gold market?
In a move that further supports gold prices, China’s central bank added gold to its reserves for the seventh straight month in May. The People’s Bank of China increased its holdings by 60,000 troy ounces, pushing its total reserves to 73.83 million troy ounces.
This steady buying by one of the world’s largest central banks indicates strong long-term demand for gold, even as global prices approach all-time highs. China’s strategy to diversify reserves away from the U.S. dollar could be another signal that gold demand may stay firm throughout 2025.
What’s happening with other metals like silver, platinum, and copper?
While gold made modest gains, other precious and industrial metals saw mixed movements. Platinum futures surged 3.6% to $1,255.65 per ounce, maintaining levels near a four-year high. In contrast, silver futures dropped 0.9% to $36.328 per ounce, falling from their 13-year peak.
In industrial metals, copper prices slipped. London Metal Exchange (LME) benchmark copper futures fell 1.4% to $9,620 per ton, and U.S. copper futures dropped 2.3% to $4.7860 per pound. The declines came amid concerns that high tariffs and slowing global growth could reduce demand for base metals.
Could gold prices climb toward the $3,400 mark?
With uncertainty still looming over U.S.-China trade relations, inflation remaining sticky, and central banks like China continuing to buy gold, the outlook for the yellow metal remains bullish—at least in the near term.
According to OANDA’s Vawda, “If it does not [fall], then a run toward the $3,400/oz level and beyond starts to look like a real possibility.” But that hinges heavily on what comes next from both the CPI data and trade negotiations.
For now, gold is holding its ground and may continue to shine if geopolitical and economic uncertainties persist. Investors and analysts alike will be watching closely to see how inflation data and trade developments unfold over the coming days.
FAQs:
What is driving gold prices higher in 2025?
Gold prices are rising due to U.S.-China trade worries, inflation fears, and strong demand from China.
Can gold hit $3,400 if inflation stays high?
Yes, if inflation stays high and trade talks stall, gold could reach or pass $3,400.
