Forex News

• Gold price gains ground in Thursday’s early European session.
• Trump arrived in Beijing, where he will meet with Xi Jinping to discuss topics including trade and the Iran war.
• US wholesale inflation accelerated at its fastest annual pace in four years.

Gold price (XAU/USD) trades in positive territory during the early European trading hours on Thursday. The precious metal edges higher as traders await the outcome of US President Donald Trump-Chinese President Xi Jinping summit in Beijing. The US April Retail Sales report will also be in the spotlight later on Thursday.

News agency Xinhua reported on Thursday that Xi Jinping told US CEOs accompanying Trump on a Beijing visit that China's door would only open wider, and that he believed US companies would have more opportunities in the country. 

Xi met with the delegation of CEOs at the Great Hall of the People, which included Elon Musk, Jensen Huang of Nvidia (NVDA.O), and Tim Cook of Apple (AAPL.O). Trump stated on Tuesday that he would ask Xi to "open up" China when they met.

US wholesale inflation accelerated at its fastest annual pace in four years. The surge in producer prices reinforced market expectations that the Federal Reserve will maintain elevated interest rates to combat persistent inflationary pressures.

Data released by the US Bureau of Labor Statistics on Wednesday showed that the US Producer Price Index (PPI) jumped by 6.0% YoY in April, following the 4.3% seen in March. This figure came in hotter than the expectations of 4.9%. On a monthly basis, the PPI inflation rose to 1.4% in April from 0.7% in March, and was much higher than the anticipated 0.5%.

Wholesale inflation hit its highest since December 2022, driven by surging oil prices linked to tensions in the Middle East. This report has reinforced market expectations that the US Federal Reserve (Fed) will maintain elevated interest rates to combat persistent inflationary pressures, which could weigh on the yellow metal. 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.

XAU/USD daily chart

Technical Analysis:

In the daily chart, XAU/USD trades at $4,705, maintaining a mildly bearish bias as it holds below the 100-day simple moving average (SMA). Price trades just above the Bollinger middle band, suggesting tentative support around the midline of the recent range, while the Relative Strength Index (RSI) at 49.65 points to neutral momentum and a consolidative tone rather than a decisive trend.

On the topside, initial resistance emerges at the 100-day SMA around $4,790, with further upside capped by the upper Bollinger band near $4,838 if buyers extend the rebound. On the downside, immediate support is seen at the Bollinger middle band at approximately $4,680, ahead of a lower support zone near the lower Bollinger band at $4,518, where a deeper pullback could attempt to stabilize.

(The technical analysis of this story was written with the help of an AI tool.)

UOB economists Quek Ser Leang and Lee Sue Ann notes EUR/USD remains under mild pressure after breaking below 1.1720 and touching 1.1695. While intraday conditions look oversold and suggest a 1.1700–1.1755 range, the 1–3 week view still points to a downside bias toward 1.1675. Further losses toward last month’s 1.1655 low are seen as less likely unless momentum strengthens.

Euro pressured but near-term oversold

"24-HOUR VIEW: After EUR fell to a low of 1.1721 two days ago, we highlighted yesterday that “despite the relatively sharp drop, downward momentum has not increased by much.” However, we were of the view that EUR “could retest the 1.1720 level before a recovery can be expected.” We did not expect EUR to drop to a low of 1.1695. EUR recovered from the low to close 0.23% lower at 1.1710. Tentative slowdown in downward momentum, combined with oversold conditions, suggests that instead of continuing to weaken, EUR is more likely to trade in a range today, probably between 1.1700 and 1.1755."

"1-3 WEEKS VIEW: Our most recent narrative was from two days ago (12 May, spot at 1.1780), in which we stated that EUR “is likely to trade between 1.1720 and 1.1820.” Yesterday, EUR broke below 1.1720 and dropped to a low of 1.1695. There has been an increase in downward momentum, but not significantly. From here, EUR could trade with a downside bias toward 1.1675. Further declines are not ruled out, but based on the current momentum, last month’s low, near 1.1655, is likely out of reach. The downside bias will remain intact as long as EUR holds below the ‘strong resistance’ level, now at 1.1765."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

The European Central Bank Governing Council member Martins Kazaks said in an interview with the public broadcaster LTV on Thursday, the central bank could opt for an interest rate hike if rising oil prices deanchored inflation expectations.

“Oil prices are higher, we see that it’s gradually starting to push inflation up, and if inflation expectations start to deteriorate, then the ECB will be forced to raise interest rates,” Kazaks said.

Market reaction

At the time of writing, EUR/USD is down 0.05% on the day, still defending the 1.1700 level.