Gold languishes near 2-month low amid US debt deal optimism

Tuesday,   30-May-2023   08:02 AM (IST)

Gold prices were little changed in early Asian trade on Tuesday, lingering near a two-month low, as optimism over a U.S. debt ceiling deal along with a firm dollar dented the metal’s appeal. Spot gold was flat at $1,942.16 per ounce by 0020 GMT, not far from a two-month low hit on Friday. U.S. gold futures fell 0.1% to $1,941.80. The dollar index held firm, making bullion less attractive for holders of other currencies. U.S. President Joe Biden said on Monday he feels good about prospects for passage by Congress of the debt ceiling deal that he reached with House of Representatives Speaker Kevin McCarthy. However, a handful of hard-right Republican lawmakers said they would oppose a deal to raise the $31.4 trillion debt ceiling. Focus now turns to passage of the deal through Congress before June 5. Having navigated the financial crisis of 2008, the president of the Federal Reserve Bank of Minneapolis, Neel Kashkari, worries about systemic risks. But now, as a U.S. monetary policymaker, he worries even more about inflation. Fed officials have in recent days turned up the heat with a hawkish outlook on interest rates, and that has to some extent offset safe-haven flows around the U.S. debt ceiling situation as higher interest rates dull the appeal for zero-yield bullion.  Markets are now pricing in a 39.2% chance of the Fed keeping rates on hold in June. Spot silver fell 0.2% to $23.15 per ounce, while platinum rose 0.2% to $1,027.02, and palladium advanced 1.2% to $1,431.71. In the physical market, net imports into the world’s top gold consumer, China, rose to 49.906 tonnes in April, the highest since February, and compares with 47.527 tonnes in March.