US-China Trade Summit Reduces Immediate Risks, Markets Focus on Inflation and Interest Rates

The US-China trade summit has reduced immediate risks of another tariff escalation, but unresolved disputes remain.

Market drivers are shifting back to inflation, interest rates, and oil prices. US Treasury yields have climbed to new highs in response to elevated energy costs and strong economic activity.

The Federal Reserve has raised its policy rate by 25 basis points this month, with six out of eight policymakers projecting at least one additional increase before the end of 2026.

Gold prices are under pressure from higher Treasury yields, a firmer US dollar, and expectations for further Fed tightening. The next move may depend heavily on US economic data, particularly Core PCE and Non-Farm Payrolls reports.