Gold turns flat with a little bit of help from a weaker Greenback

LONDON (May 14) Gold (XAU/USD) dips back to $3,235 on Wednesday while the worst of the selling pressure seems to be over due to a softer US Dollar (USD).  The softer-than-expected inflation reading for April released on Tuesday, gave markets a push to head into Risk On assets, with the widely-feared inflation shock from tariffs not materializing yet. The softer-than-expected reading for both the monthly Headline and core components boosted a relief rally in equities and led investors to price in more Federal Reserve (Fed) rate cuts for this year. 

Without any top-tier data releases for Wednesday in the Economic Calendar, markets will look for further clues after President Donald Trump visited Saudi Arabia and secured $600 billion in trade deals. On Thursday, Ukrainian President Volodymyr Zelenskyy is said to be ready to meet Russian President Vladimir Putin in Istanbul for peace talks, although Putin hasn’t confirmed his attendance. Both Europe and the US have urged Putin to come to Istanbul, while new sanctions are being weighed as countermeasures if peace talks do not take place. 

Daily digest market movers: Gold impacting India's trade deficit

• Gold is facing more downside pressure, several analysts and Gold traders confirm to Bloomberg. “The US-China tariff rates surprised materially to the downside, which eases investor concerns around trade-driven growth risks,“ said Justin Lin, an analyst at Global X ETFs. “Capital is likely flowing out of defensive sectors and Gold," he added. 
• Still, the Gold rally could possibly not yet be out of steam, according to Amy Lo, UBS head of wealth management in Asia. UBS Group AG’s rich clients are increasingly shifting away from US-dollar assets, turning instead to Gold, crypto and investments in China. “Gold is getting very popular,” Amy Lo said in an interview with Yvonne Man at Bloomberg’s New Voices event Tuesday in Hong Kong. 
• India’s trade deficit likely narrowed to $18.9 billion in April from $21.5 billion in March. The contraction in the deficit was partly due to a drop in Gold imports – a surge in prices likely reduced demand for the metal. A sharp drop in crude Oil prices is also expected to lower Oil imports, countering a typical seasonal jump in volumes.

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