Gold prices firm as economic risks persist

GOLD prices rose on Monday (May 15) as the US debt ceiling stalemate and concerns over an economic slowdown steered some traders towards the safe-haven metal.

Spot gold was up 0.4 per cent at US$22,018.76 per ounce by 0727 GMT, after falling for three sessions. US gold futures rose 0.2 per cent to US$2,023.60.

Recent downside surprises in US economic data have lifted the chances of a recession over the next 12 months, with safe-haven flows providing somewhat of a cushion for gold, said Yeap Jun Rong, a market analyst at IG.

Data on Friday showed US consumer sentiment slumped to a six-month low in May on worries that political haggling over raising the federal government’s borrowing cap could trigger a recession.

US President Joe Biden said he expects to meet with congressional leaders on Tuesday for talks on a plan to raise the nation’s debt limit and avoid a catastrophic default.

Bullion tends to gain during times of economic or financial uncertainty, but higher interest rates dim non-yielding gold’s appeal.

“Gold held onto recent gains, with the precious metal trading just below its record high as the market assesses the Fed’s next move,” ANZ said in a note.

Markets are pricing in an 83.4 per cent chance of the US central bank holding rates at the current level in June, according to the CME FedWatch tool.

But taking some shine off gold, rival safe-haven US dollar hit a five-week high against major peers and made bullion less affordable for buyers holding other currencies.

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Gold prices flat as steady dollar counters economic risks

Gold might end its bounce around a resistance at US$2,031, before resuming its fall towards US$2,003, according to Reuters technical analyst Wang Tao.

Elsewhere, spot silver rose 0.8 per cent to US$24.11 per ounce and palladium gained 0.8 per cent to US$1,521.08.

Platinum advanced 1.1 per cent to US$1,061.27.

A global deficit of platinum in 2023 will be 77 per cent larger than previously expected due to supply constraints and higher demand, the World Platinum Investment Council said in a quarterly report. REUTERS