Gold prices flat as traders seek direction from US debt talks
GOLD prices were flat in early Asian trade on Thursday (May 18) as markets focused on the US debt-limit negotiations, with a firmer dollar capping gains after traders dialled back expectations of a rate cut this year by the Federal Reserve.
Spot gold steadied at US$1,982.85 per ounce by 0046 GMT, while US gold futures were also listless at US$1,985.30.
The dollar index held firm after hitting a seven-week high in the previous session, making gold less attractive for overseas investors.
US President Joe Biden and top congressional Republican Kevin McCarthy on Wednesday underscored their determination to reach a deal soon to raise the federal government’s US$31.4 trillion debt ceiling and avoid an economically catastrophic default.
US Treasury yields rose on Wednesday amid some cautious optimism around lawmakers’ talks to raise the US debt ceiling and on the back of strengthening expectations of higher-for-longer interest rates.
Risks to the economic outlook at a time of rapid Federal Reserve rate hikes remain high, even as they eased a bit, according to a report Wednesday from the Federal Reserve Bank of New York.
Markets are currently pricing in a 71.6 per cent chance of the US central bank holding rates at the current level in June, according to the CME FedWatch tool.
While gold is considered a hedge against inflation, rising interest rates dull non-yielding bullion’s appeal.
Spot silver rose 0.2 per cent to US$23.77 per ounce, platinum ticked up 0.1 per cent to US$1,069.90, while palladium was flat at US$1,486.43. REUTERS
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