Gold prices were little changed on Wednesday as markets waited for the upcoming meeting between the US President Donald Trump and his Chinese counterpart Xi Jinping.
Silver prices, however, popped more than 4% to more than $89 per ounce.
On the other hand, oil prices were mixed with West Texas Intermediate crude in the green, and Brent was down slightly.
Among base metals, the aluminium and copper contracts on the London Metal Exchange rose sharply on Wednesday.
Gold steady, silver jumps
Gold prices remained steady on Wednesday after spending most of the day in the red.
On Wednesday morning, gold appeared poised for an upward breakout, reaching a three-week high of around $4,774.
This surge followed a bounce off the $4,500 level, which had served as support after the price had recovered from a month-long low set just over a week ago.
“But it was unable to progress further, and soon it was pulling back and struggling to find support. This is hardly surprising given recent US dollar strength,” said David Morrison, senior market analyst at Trade Nation.
At the time of writing, the COMEX gold contract was at $4,695 per ounce.
Driven by the Iran war, US producer prices accelerated in April, surpassing expectations and recording their largest increase since early 2022, signaling a revival in inflationary pressure.
Rising interest rates typically put downward pressure on gold, as the non-yielding metal is generally seen as a hedge against inflation.
Recent data released on Wednesday revealed a further increase in US consumer inflation for April, with the annual rate marking its most significant rise in three years.
Despite the inflation data, the US central bank kept its benchmark overnight interest rate steady last month, holding it within the 3.50% to 3.75% range.
According to CME Group’s FedWatch tool, traders have mostly ruled out the possibility of a US rate cut this year.
Silver showed relative resilience compared to gold, hitting a more than two-month high of $89.365 per ounce on Wednesday, marking a gain of over 23% since late April.
Traders may be speculating that silver is poised for a breakout, potentially surpassing its late January all-time high.
The probability would increase if it can break and hold above $90 per ounce, but that may be a high hurdle under current circumstances.
Oil mixed
Despite a sharp decline in US crude inventories, oil prices saw little movement on Wednesday. However, the US crude benchmark was slightly higher.
Investor attention was primarily focused on the delicate Middle East ceasefire and the high-stakes summit in Beijing involving President Trump and China’s Xi Jinping.
The Brent crude contract was last at $107.22 per barrel, down 0.4%, while WTI was at $102.79 per barrel, up 0.6% from the previous close.
US crude futures and Brent prices saw an extension of gains following the release of new data.
The US Energy Information Administration reported on Wednesday that crude stocks dropped by 4.3 million barrels last week, a larger draw than the 2.1 million barrels analysts anticipated in a Reuters poll.
The data also showed a decline in gasoline stocks by 4.1 million barrels, surpassing the expected 2.9-million-barrel draw from the poll.
In contrast, distillate stockpiles, encompassing heating oil and diesel, rose by 200,000 barrels, which was contrary to the expected 2.7-million-barrel drop.
This upward momentum in oil prices follows Tuesday’s rally, where prices surged over 3%.
This earlier rise was fueled by fading hopes for a lasting US-Iran ceasefire, which diminished the likelihood of the Strait of Hormuz—a crucial transit point for approximately a fifth of the world’s liquefied natural gas and oil—being reopened.
Despite weakening prospects for a lasting peace deal and Tehran tightening its grip over the Strait, Trump arrived in Beijing on Wednesday.
His visit follows his statement on Tuesday that he did not believe he would require China’s assistance to conclude the war.
Trump is scheduled to meet with Xi on Thursday and Friday. China remains the largest purchaser of Iranian oil, even under sanctions pressure from the Trump administration.
Copper and aluminium
Copper is once again the focal point of the market this morning, with its rally picking up speed as the global supply situation becomes increasingly tight.
Prices are nearing the previous record $14,527.50 per ton established earlier this year.
This upward momentum is being driven by reduced mine production, a worsening shortage of sulphur, and sustained strong demand from China.
“The market tone has been shaped for some time by persistent questions around the industry’s ability to expand supply, yet these concerns are now coming into clearer focus and are increasingly reflected in price behaviour,” Neil Welsh, head of metals market at Britannia Global Markets, said.
What had long been viewed as a gradual mismatch between supply growth and the structural rise in demand driven by power grid investment, renewable energy deployment and the rapid buildout of artificial intelligence infrastructure is now being treated as a more immediate constraint rather than a distant imbalance.
The market’s sensitivity to small disruptions is highlighted by the recent price surge above $14,000 per ton.
This increase is driven by several simultaneous pressures.
Middle Eastern sulphur limitations are now posing a risk to African production, coinciding with underperformance at several other significant global mines.
Furthermore, refined output in China is expected to drop in both April and May—it already fell in April—as smelters undergo maintenance and face tighter feedstock supply.
“Some traders look to be positioning themselves for a move higher though options plays such as buying calls in Sep26 at $15.5k and $17k strikes,” Welsh said.
While other base metals show mixed results, the spotlight is on aluminum due to warnings that inventories could become extremely low by year-end.
However, copper remains the dominant factor.
Deepening supply issues and expanding demand drivers mean the market enters today with an upward bias, despite high prices somewhat reducing downstream purchasing.
The copper contract on LME was at $14,116.23 per ton, up 0.7%, while the aluminium contract was at $3,646.50 per ton, up 2% from the previous close.
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