Gold prices dip on US debt ceiling deal, Fed rate-hike bets

Monday,   29-May-2023   08:21 AM (IST)

Gold prices slipped on Monday as a tentative deal sealed over the weekend to suspend the U.S. debt ceiling coupled with jitters around higher-for-longer interest rates weighed down on the non-yielding metal’s appeal. Spot gold was down 0.3% at $1,941.45 per ounce by 0059 GMT, hovering near two-month lows hit on Friday. U.S. gold futures fell 0.2% at $1,940.70. The dollar edged up 0.1%, making bullion more expensive for holders of other currencies. U.S. President Joe Biden said on Sunday he had finalized a budget agreement with House Speaker Kevin McCarthy to suspend the $31.4 trillion debt ceiling until Jan. 1, 2025 and that the deal was ready to move to Congress for a vote. Data on Friday showed U.S. consumer spending increased more than expected in April, boosting the economy’s growth prospects for the second quarter, and inflation picked up. The report raised the chances of a 25-basis-point hike by the U.S. central bank in June to 64.2% and rates staying there for the rest of the year, according to the CME FedWatch tool. Gold, which offers no yield of its own, tends to fall out of favour among investors when interest rates rise. Asian shares and U.S. stock futures rose on Monday as the deal to suspend the U.S. government’s debt ceiling ended a months-long stalemate and angst for investors. Spot silver fell 0.3% to $23.25 per ounce, platinum edged 0.2% lower to $1,020.11, while palladium rose 0.3% to $1,427.39. U.S. markets will be closed on Monday for the Memorial Day holiday.