Investing.com-- Gold prices were slightly higher Wednesday, but upside was kept in check by easing geopolitical tensions as U.S. President Trump said that Russian President Vladimir Putin had agreed to start talks to end the Ukraine war.
At 5:00 p.m. ET (22:00 GMT), Spot gold rose 0.2% to $2,904.24 an ounce, while gold futures expiring in April fell 0.1% to $2,928.95 an ounce.
Gold pressured by easing geopolitical pressures
Trump said talks to end the Ukraine war would start “immediately” after holding a call with Putin on Wednesday morning.
"We have also agreed to have our respective teams start negotiations immediately, and we will begin by calling President Zelenskyy, of Ukraine, to inform him of the conversation, something which I will be doing right now,” Trump wrote on Truth Social.
The news provided a semblance of hope that the Ukraine war could be nearing an end and eased geopolitical tensions, dimming safe-haven demand somewhat.
Adding to headwinds for the yellow metal, Treasury yields continued to rise after U.S. consumer prices rose by more than expected in January, pointing to lingering inflationary pressures.
Headline consumer prices increased by 3.0% in the twelve months to January, from 2.9% the prior month, while the monthly gauge unexpectedly accelerated to 0.5%, up from 0.4% in the prior month.
The so-called core measure, which strips out volatile items like food and fuel, rose by 3.3% year-over-year, compared to 3.2% in December, and rose by 0.4% on the month, versus 0.2% in the previous month.
The numbers are the latest indication that a recent slowdown in price gains has stalled at a level above the Fed’s stated 2% target, pushing the rate-sensitive 2-year U.S. Treasury yield and benchmark 10-year yield, as well as the dollar, higher. Yields typically move inversely to prices.
This week, Fed Chair Jerome Powell told a Congressional committee in a testimony that stubborn above-goal inflation contributed to policymakers’ decision in January to push pause on a series of rate cuts that stretched back into 2024 and signal a wait-and-see attitude to further borrowing cost drawdowns.
The prospect of high interest rates presents more pressure for non-yielding assets such as gold, given that it increases the opportunity cost of investing in the assets, while a stronger dollar makes commodities denominated in the greenback, like gold, more expensive for foreign buyers.
Strong run-up this week
Still, despite recent losses, gold was sitting on a strong run-up over the past week.
Still, gold hit a series of record highs this week, as risk aversion surged in the face of increased U.S. trade tariffs under President Donald Trump. Trump imposed 25% import duties on steel and aluminum, and also flagged plans for reciprocal tariffs against America’s biggest trading partners.
The move ramped up demand for safe haven assets, as did Trump’s rhetoric on the Israel-Hamas conflict and the Gaza strip, which attracted ire from Middle Eastern powers. Spot gold hit a record high of $2,943.25 an ounce on Tuesday.
Other precious metals edged higher adding to their gains over the past week, although they mostly lagged gold. Platinum futures were up 1% to $1,045.65 an ounce, while {{|silver futures}} 1.2% to $32.703 an ounce.
Among industrial metals, benchmark copper futures on the London Metal Exchange rose 1.3% to $9,483.00 a ton, while March copper futures rose 2% to $4.6915 a pound.
(Peter Nurse, Ambar Warrick contributed to this article.)