Spot gold was down 0.6% to $4,686.99 an ounce, while U.S. gold futures for June delivery gained 0.2% to $4,694.70.
U.S. producer prices increased more than expected in April, posting their biggest gain since early 2022, the latest indication that inflation was accelerating amid the Iran war.
“Inflation remains sticky and so the expectations for higher rates for longer was reinforced, and that’s been pressuring gold the last two days,” said Peter Grant, vice president and senior metals strategist at Zaner Metals.
Gold is often viewed as a hedge against inflation, but higher interest rates tend to pressure the non-yielding metal. Data on Wednesday showed that U.S. consumer inflation increased further in April, with the annual rate posting its largest gain in three years.
The U.S. central bank last month left its benchmark overnight interest rate in the 3.50% to 3.75% range. Traders have largely priced out a U.S. rate cut this year, according to the CME Group’s FedWatch tool.
President Trump embarks on the first visit by a U.S. president to China in nearly a decade, eager to snag some deals, maintain a fragile trade truce with the world’s second-largest economy and prop up public approval ratings bruised by his war with Iran.
Meanwhile, India raised import tariffs on gold and silver to 15% from 6%, as part of an effort to curb overseas purchases of the metals and ease pressure on the country’s foreign exchange reserves. India is the world’s second-largest consumer of precious metals.
The news about higher import duties in India has created some demand concerns and could pose a long-term headwind, Grant said.
Spot silver fell 0.2% to $86.70 per ounce, after hitting a two-month high earlier in the session.
Platinum lost 0.3% to $2,120.20, after hitting its highest level since March 17. Palladium was down 0.4% at $1,484.10.