Gold prices flat as steady dollar counters economic risks

GOLD prices were flat on Monday (May 15) as a steady US dollar countered support from wider economic risks and expectations that the Federal Reserve would pause its interest rate-hike cycle.

Spot gold was listless at US$2,011.04 per ounce by 0049 GMT. US gold futures fell 0.2 per cent to US$2,015.10.

The dollar edged higher, making greenback-priced bullion less affordable for overseas buyers.

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.

Markets are pricing in an 84.6 per cent chance of the US central bank holding rates at the current level in June, according to the CME FedWatch tool.

European Central Bank (ECB) interest rate hikes are in their final stretch, said ECB vice-president Luis de Guindos, while warning that higher borrowing costs could put stress on banks’ asset quality, even if indicators so far remain healthy.

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

Physical gold demand in India improved slightly last week as domestic prices eased from recent record highs, while demand was weak in other Asian centres with some dealers offering discounts in top bullion consumer China to attract buyers.

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Gold edges higher as dollar slips; US Fed outlook in focus

Spot silver rose 0.3 per cent to US$23.99 per ounce, and platinum advanced 0.6 per cent to US$1,056.30. REUTERS