Gold falls on US inflation rising to 2023 highs

Today’s headlines

What’s happening: Gold prices fell this morning following the release of inflation data from the US.

What happened: Higher-than-expected inflation figures from the US lowered speculations of rate cuts by the Federal Reserve.

Investors continued assessing the latest developments in the Middle East conflict.

Why it matters: US consumer inflation accelerated to 3.8% in April, coming in higher than market estimates of 3.7%. This marked the highest reading since May 2023, with surging energy prices due to the Middle East conflict.

Energy costs surged 17.9% in April, from 12.5% in the previous month, representing the steepest annual rise since September 2022.

Investors widely expect the Federal Reserve to keep its benchmark interest rates unchanged for the rest of the year, while speculating of a rate hike in April next year.

US President Donald Trump announced new measures to ease consumer costs, with his administration facing intensifying pressure before the midterm elections in November.

Trump said the ceasefire between the US and Iran was on “massive life support,” following his rejection of Iran’s proposal, providing a further boost to energy prices and raising inflation concerns.

Weakness in the US dollar lent some support to gold prices as a softer greenback makes metals cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, slipped to 98.29 this morning.

Spot price for gold fell 0.3% to trade at $4,702.01 an ounce this morning.

In other metals trading, platinum fell 0.9% to $2,112.27, while palladium declined 0.5% to $1,488.00 this morning. Silver outperformed other precious metals due to an improving forecast for industrial demand. The metal is widely used in solar panels, electronics, and other industrial products, while also being used as a traditional investment alternative to gold. Spot price for silver rose 0.3% to $86.8070 an ounce.

What to watch: Investors will continue monitoring developments between the US and Iran. The US-China summit in Beijing will also remain in focus.

Data on US PPI (1630 UAE Time) will be released today. US producer prices are expected to rise by 0.5% in April, matching the previous month’s growth. Analysts also expect US producer prices to surge by 4.9% year-over-year in April following a 4.0% rise in March.

The markets today

JD.com in focus today following the release of its first-quarter results

Context: Shares of JD.com rose on Tuesday after the company reported better-than-expected sales and earnings for its fiscal first quarter.

Details: China’s ecommerce giant reported revenues of 315.7 billion yuan ($46.47 billion), topping consensus estimates of 311.8 billion yuan. Net income attributable to ordinary shareholders contracted 53% year-over-year to 5.1 billion yuan, but topped Wall Street expectations of 3.37 billion yuan.

JD.com swung to profits in the latest quarter after reporting a net loss of 2.71 billion yuan in the previous quarter, driven by an improvement in performance in its food-delivery segment.

The company’s food delivery business contributed 3% to advertising revenues in the first quarter, CEO Sandy Xu said.

The company faced significant pressure following its entry into China’s food-delivery business in 2025, resulting in huge investments and higher price competition from rivals like Alibaba Group.

JD.com reported a surge in marketing costs, representing 4.9% of revenue, mainly due to promotional spending related to new business initiatives.

How shares responded: JD.com’s shares rose 3.1% to close at $31.49 on Tuesday following the release of quarterly results. The stock has climbed around 9% over the past month.

What to watch: Investors will continue monitoring the company’s performance in food delivery, which is expected to provide a significant boost to its overall results ahead.

Other Markets: European indices closed lower on Tuesday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index down by 0.04%, 1.62%, 0.95% and 1.01%, respectively.

The news shaping the markets

Russia has claimed to have successfully tested a new nuclear-capable ballistic missile, which could come into use this year. The news sent the USD/RUB pair lower in forex trading this morning.

Australia’s wage price index surged 3.3% year-over-year in the first quarter, compared to a 3.4% rise in the previous quarter. The latest reading coming in-line with market estimates lent support to the AUD/USD forex pair.

Mexico’s outlook was cut by S&P Global Ratings from “stable” to “negative”, which sent the USD/MXN pair higher in forex trading this morning.

South Korea’s unemployment rate rose to 2.8% in April from 2.7% in the previous month, lending support to the USD/KRW forex pair.

Japan’s current account surplus widened to ¥4,681.5 billion in March from ¥3,625.3 billion in the year-ago month. However, the USD/JPY pair gained in forex trading this morning.

What else to watch today

Eurozone’s employment change (1300 UAE Time), industrial production (1300 UAE Time) and GDP growth rate (1300 UAE Time), Germany’s current account (1645 UAE Time), US MBA mortgage applications (1500 UAE Time), EIA crude oil stocks change (1830 UAE Time), Brazil’s retail sales (1600 UAE Time) as well as the Bank of Canada’s summary of deliberations (2130 UAE Time).