Gold prices declined in European trading on Wednesday, deepening losses for a second consecutive session and hitting their lowest levels in nearly two months, pressured by the stronger US dollar and rising Treasury yields, which outweighed the impact of hopes for a peace agreement between the United States and Iran.

As inflationary pressures intensify once again for Federal Reserve policymakers, expectations have increased that the Fed could raise interest rates at least once this year. Investors are also awaiting the release of the minutes from the latest US monetary policy meeting later today for further clues on the rate outlook.

Price overview

• Gold prices today: Gold fell 0.65% to $4,453.60 per ounce, the lowest level since March 30, from an opening level of $4,482.19, after touching an intraday high of $4,508.87.

• At Tuesday’s settlement, gold lost 1.9%, marking its fifth loss in the past six sessions amid escalating tensions in the Middle East.

The US dollar

The US Dollar Index rose around 0.2% on Wednesday, extending gains for a second straight session and reflecting continued strength in the US currency against a basket of major and minor currencies.

As is well known, a stronger US dollar makes dollar-denominated gold bullion less attractive to holders of other currencies.

The dollar continues to receive clear support from higher US Treasury yields, as investors increasingly bet that the Federal Reserve will raise interest rates at least once this year.

The yield on benchmark 10-year US Treasury notes remained near its highest level in more than a year on Wednesday, increasing the opportunity cost of holding non-yielding gold.

Developments in the Iran war

• US President Donald Trump stated that he would “end the war with Iran very quickly,” expressing confidence in resolving the conflict.

• Vice President JD Vance announced that the United States and Iran had made “very significant progress” in their ongoing negotiations.

• The diplomatic progress comes after Trump officially revealed that a large-scale planned military attack on Tehran had been postponed following a direct request from leaders of Saudi Arabia, the UAE, and Qatar, in order to give mediation efforts a final “two or three day” window.

US interest rates

• Kevin Warsh will be sworn in as Chairman of the Federal Reserve on Friday.

• Philadelphia Federal Reserve President Anna Paulson said the current level of interest rates remains appropriate for now, helping push inflation lower while price pressures remain elevated.

• Paulson added that it is “healthy” for investors to begin considering scenarios that could require further interest rate hikes.

• According to the CME FedWatch Tool, markets are currently pricing in a 45% probability that the Federal Reserve will raise interest rates in December, up from just above 16% at the beginning of May.

• Markets are also pricing a 99% probability that rates will remain unchanged at the June meeting, while the probability of a 25-basis-point rate cut stands at just 1%.

• To reassess these expectations, investors are closely watching the release of the latest Federal Reserve meeting minutes at 18:00 GMT.

Gold outlook

Tim Waterer, Chief Market Analyst at KCM Trade, said gold is losing some momentum as yields rise and the dollar rebounds amid increasingly hawkish expectations for Federal Reserve policy.

SPDR Gold Trust

Holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 2 metric tons on Tuesday, bringing total holdings down to 1,036.85 metric tons, the lowest level in a week.

The British pound rose slightly in European trading on Wednesday against a basket of global currencies, moving into positive territory against the US dollar as the greenback slowed following recent White House comments regarding progress in peace talks between the United States and Iran.

Prominent British media outlets reported that Prime Minister Keir Starmer has decided to step down from office in response to mounting pressure and a broad internal revolt led by lawmakers from the ruling Labour Party.

Investors are awaiting key UK inflation data for April later today in order to reassess expectations surrounding British interest rates.

Price overview

• GBP/USD today: The pound rose by less than 0.1% against the dollar to $1.3407, from the day’s opening level at $1.3396, after touching an intraday low of $1.3378.

• Sterling lost 0.3% against the dollar on Tuesday, resuming losses that had paused the previous session during a rebound from a six-week low of $1.3303.

The US dollar

The US Dollar Index slipped by less than 0.1% on Wednesday, pulling back from a six-week high of 99.43 points, reflecting slower momentum in the US currency against a basket of major global currencies.

Beyond profit-taking activity, the dollar weakened after recent comments from President Donald Trump and Vice President JD Vance regarding developments in peace negotiations between the United States and Iran.

Trump stated that he would “end the war with Iran very quickly,” expressing confidence in resolving the conflict, while Vice President JD Vance said the United States and Iran had made “very significant progress” in their ongoing negotiations.

Later today, markets await the release of the minutes from the Federal Reserve’s latest monetary policy meeting, which are expected to provide stronger clues regarding the possibility of further US interest rate hikes to combat rising inflationary pressures.

Political developments

Major British media sources reported that Prime Minister Keir Starmer has decided to resign in response to intense political pressure and a widening rebellion led by members of the ruling Labour Party.

An official statement or press conference from Starmer outlining the resignation details and transition timetable is expected within the coming hours.

The shift came after Labour lawmakers reportedly rejected his latest attempts to remain in power and blamed him fully for the party’s historic and severe defeat in the recent local elections.

British interest rates

• The International Monetary Fund said on Monday that the Bank of England does not need to raise interest rates and may instead need to cut them.

• Market pricing for a Bank of England rate hike at the June meeting remains steady around 45%.

UK inflation data

To reassess current interest rate expectations, investors are awaiting the release of Britain’s key inflation figures for April later today, with the data expected to significantly influence the Bank of England’s monetary policy outlook.

At 06:00 GMT, headline consumer price index data is expected to show annual inflation rising 3.0% in April, down from 3.3% in March, while core CPI is expected to slow to 2.6% annually from 3.1% previously.

Outlook for the British pound

At Economies.com, we expect that if UK inflation data comes in below market expectations, the probability of a June Bank of England rate hike will decline, placing additional downward pressure on the British pound.

The Japanese yen strengthened in Asian trading on Wednesday against a basket of major and minor currencies, posting its first gain in eight sessions against the US dollar as traders engaged in bargain buying from lower levels, while Japanese monetary authorities closely monitored the key ¥160 threshold.

US Treasury Secretary Scott Bessent said he was confident that Bank of Japan Governor Kazuo Ueda would do “whatever is necessary” if granted sufficient independence by the Japanese government, signaling Washington’s preference for further interest rate hikes by the Japanese central bank.

Price overview

• USD/JPY today: The dollar fell against the yen by 0.15% to ¥158.84, from the day’s opening level at ¥159.08, after touching an intraday high of ¥159.11.

• The yen closed Tuesday down 0.2% against the dollar, marking its seventh consecutive daily loss, while touching a three-week low of ¥159.25 amid continued assessment of developments surrounding the Iran war.

Japanese authorities

Japanese authorities are closely monitoring movements in the domestic currency market, especially as the yen weakens toward the critical ¥160 per dollar level, which is widely viewed as the threshold that could trigger another official intervention.

Sources told Reuters that Tokyo intervened several times in late April and early May to halt the yen’s decline, though the currency’s rebound proved short-lived. The yen recently weakened to ¥159.25 per US dollar, its weakest level since April 30.

The US dollar

The US Dollar Index slipped by less than 0.1% on Wednesday, retreating from a six-week high of 99.43 points, reflecting a slowdown in the dollar’s broad gains against major global currencies.

Beyond profit-taking activity, the dollar weakened following the latest comments from President Donald Trump and Vice President JD Vance regarding the progress of peace negotiations between the United States and Iran.

Trump stated that he would “end the war with Iran very quickly,” expressing confidence in resolving the conflict, while Vice President JD Vance said the United States and Iran had made “very significant progress” in their ongoing talks.

Later today, markets await the release of the minutes from the Federal Reserve’s latest monetary policy meeting, which are expected to provide stronger clues regarding the likelihood of further US interest rate hikes to confront rising inflationary pressures.

Scott Bessent and the Bank of Japan

Bessent told Reuters on Tuesday that he was confident Bank of Japan Governor Kazuo Ueda would do “whatever is necessary” if given enough independence from the Japanese government, signaling Washington’s desire for additional rate hikes from the BOJ.

In a post on X following his meeting with Ueda on Tuesday, Bessent said Japan’s economic fundamentals remain strong and that excessive currency volatility is undesirable, adding that strong economic growth justifies a stronger yen and higher Bank of Japan interest rates.

Japanese interest rates

• Data released Tuesday in Tokyo showed Japan’s economy expanded at an annualized rate of 2.3% in the first quarter of this year, beating market expectations for 1.7% growth, after the world’s fourth-largest economy grew 1.3% in the fourth quarter of last year.

• Following the data, markets raised pricing for the probability of a quarter-point Bank of Japan rate hike at the June meeting from 80% to 85%.

• Investors are now awaiting further Japanese data on inflation, unemployment, and wages in order to reassess those expectations.

The United States announced that China has committed to purchasing at least $17 billion annually in US agricultural products for three years, in addition to soybean imports, following a summit between the leaders of the two countries in Beijing last week.

China is the world’s largest importer of agricultural commodities and had sharply reduced purchases of US products after the latest trade war between the world’s two largest economies. However, both sides have now agreed to expand agricultural trade and address non-tariff barriers affecting beef and poultry, according to China’s Ministry of Commerce.

What does the agreement actually mean?

The $17 billion commitment, combined with the existing soybean obligations, would raise China’s total imports of US agricultural products to around $28–30 billion annually, according to estimates from traders and analysts.

That level would remain below the $38 billion peak reached in 2022, but would be far above the $8 billion recorded last year and the $24 billion seen in 2024.

To reach that target, Beijing would need to significantly increase purchases of wheat, feed grains, meat products, and non-food agricultural commodities such as cotton and timber.

China had previously fulfilled an earlier commitment to purchase 12 million tons of soybeans, along with quantities of wheat and large volumes of sorghum, under a prior agreement between US President Donald Trump and Chinese President Xi Jinping. Under that deal, Beijing pledged to buy at least 25 million tons of soybeans annually.

A reshaping of global trade flows

The increase in Chinese purchases of US agricultural commodities is likely to come at the expense of competing suppliers such as Brazil, Australia, and Canada.

Cheng Kang Wei, vice president at StoneX in Singapore, said achieving the $17 billion annual target excluding soybeans would “likely require a deliberate redirection of purchases away from existing suppliers toward the United States for political and strategic reasons rather than purely commercial ones.”

Brazil is currently the dominant soybean supplier to China, holding a 73.6% market share in 2025, and has also become the country’s largest corn supplier. China also approved imports of Brazilian processed feed products (DDGS) last year.

Australia, which was China’s largest wheat supplier in 2023 and largest sorghum exporter in 2025, could face weaker demand if imports of US wheat and US sorghum increase. Barley imports may also be affected, along with demand for premium Australian beef.

Canadian and French wheat exports, as well as Argentine sorghum shipments, may also face pressure as US purchases expand.

Soybeans remain at the center of the agreement

China is expected to begin purchasing soybeans from the new US harvest starting in October, with US supplies benefiting from more competitive pricing relative to Brazilian shipments.

One vegetable oils trader in Asia said: “Buying 25 million tons of US soybeans does not appear problematic, as US prices are currently attractive.”

COFCO and Sinograin are expected to be among the leading buyers.

China has sharply reduced its dependence on US soybeans since Trump’s first term, with US imports accounting for about one-fifth of China’s total soybean imports in 2024, compared with 41% in 2016.

Corn and wheat

Chinese state-owned companies are expected to remain the main buyers of US corn and wheat, given that these commodities are tied to low-tariff import quotas.

China maintains import quotas of 9.64 million tons for wheat and 7.2 million tons for corn at a 1% tariff rate, while imports exceeding those quotas face steep tariffs of up to 65%.

China’s imports of US corn dropped to just $5 million in 2025 after reaching $561.5 million the previous year, while wheat imports fell close to zero after totaling 1.9 million tons in 2024.

Sorghum and DDGS

China is also expected to increase purchases of feed grains such as sorghum, particularly after heavy rainfall damaged domestic crops in the country’s northern regions.

Sorghum is not subject to import quotas.

Since November, Beijing has purchased at least 2.5 million tons of US sorghum to offset domestic corn shortages, though increasing DDGS purchases would require removing anti-dumping and anti-subsidy duties that have been in place since 2017.

Meat and non-food commodities

China represents a major market for US meat parts such as chicken feet, pig ears, and organ meats, products that face limited domestic demand within the United States.

Imports of beef and poultry are expected to rise after both countries agreed to address outstanding issues. Beijing has already granted five-year registration renewals for 425 US beef export facilities, in addition to approving 77 new facilities.

China also introduced an import quota system for beef in December, with tariffs reaching up to 55% on volumes exceeding quotas in order to protect domestic producers.

Non-food agricultural products

Chinese imports could also include non-food products such as cotton and timber. Cotton imports fell to $225.7 million last year compared with $1.85 billion in 2024.