By Arundhati Sarkar
(Reuters) – Gold prices fell on Tuesday as the dollar firmed and traders positioned for the outcome of the U.S. debt ceiling talks, which has kept investors on the edge.
Spot gold was down 0.7% at $2,006.39 per ounce as of 0706 GMT, while U.S. gold futures shed 0.5% to $2,011.70.
A slight recovery in the U.S. dollar and profit-booking ahead of the debt limit outcome has resulted in selling pressure in gold today, said Hareesh V, research head at Geojit Financial Services.
However, prices are still hovering above the psychological level of $2,000 an ounce, opening the door for a bounce back, he added.
President Joe Biden, Republican House of Representatives Speaker Kevin McCarthy and three other top congressional leaders will meet later on Tuesday for the critical debt ceiling discussion.
Markets also took stock of U.S. Federal Reserve members playing down the possibility of rate cuts this year and that is pushing gold slightly lower, said Matt Simpson, a senior market analyst at City Index. He added that gold’s failure to hold above the previous record-high had shaken confidence.
Gold prices hit $2,072.19 earlier this month, just shy of a record-high of $2,072.49, after the Fed hinted that its marathon tightening cycle may be ending.
However, U.S. central bankers on Monday signalled they see interest rates staying high and, if anything, going higher, given inflation that may be slow to ease with the economy showing only tentative signs of weakness.
While gold is considered a hedge against inflation and economic uncertainty, rising interest rates dull the non-yielding bullion’s appeal.
Meanwhile, India slashed the base import prices of silver, and raised the price of gold, the government said late on Monday.
Spot silver fell 1.6% to $23.72 per ounce, platinum shed 0.6% to $1,058.53, palladium dropped 0.8% to $1,520.29.
(Reporting by Arundhati Sarkar in Bengaluru; Editing by Sherry Jacob-Phillips, Janane Venkatraman and Sonia Cheema)
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