Gold Prices Surge Nearly 2% Amid US Economic Uncertainty and Russia-Ukraine Peace Talk Setbacks

Gold prices experienced a significant rebound, climbing nearly 2% as investors sought refuge amid mixed signals from the U.S. economy and renewed geopolitical tensions stemming from stalled Russia-Ukraine peace negotiations.

Spot gold rose by 1.9% to $3,240.87 per ounce by 5:40 p.m. ET, effectively recouping earlier losses from the week. Concurrently, U.S. gold futures increased by 1.7%, reaching $3,243.90 an ounce in New York trading .

Economic Indicators Fuel Market Uncertainty

The uptick in gold prices was influenced by recent U.S. economic data that painted a complex picture. April’s Producer Price Index (PPI) and retail sales figures fell short of expectations, suggesting a potential slowdown in economic growth. This has led market participants to anticipate possible interest rate cuts by the Federal Reserve later in the year .

A softer U.S. dollar, which declined by 0.1%, further bolstered gold’s appeal by making the metal more affordable for holders of other currencies .

Geopolitical Tensions Reinforce Safe-Haven Demand

Simultaneously, geopolitical developments added to market volatility. In Istanbul, the first direct peace talks between Russia and Ukraine since early 2022 commenced. However, the absence of Russian President Vladimir Putin, who sent a lower-level delegation instead, dampened hopes for a breakthrough. Ukrainian President Volodymyr Zelensky criticized the Russian delegation as lacking authority, referring to it as a “dummy” team .

U.S. President Donald Trump expressed skepticism about the effectiveness of the talks without direct involvement from both himself and Putin, stating that meaningful progress is unlikely without their participation .

The convergence of economic uncertainty and geopolitical instability has reinforced gold’s status as a safe-haven asset. Investors are closely monitoring upcoming economic indicators and international developments to gauge the metal’s future trajectory.

As the global landscape remains fraught with unpredictability, gold’s role as a hedge against economic and political turmoil continues to be a focal point for market participants.