By Kavya Guduru
(Reuters) – The price of gold slipped on Thursday as signs that a deal to raise the U.S. debt ceiling could be reached in Washington reduced its safe haven appeal. Fading expectations for early U.S. rate cuts also took the shine off non-yielding bullion.
Spot gold fell 0.3% to $1,976.69 per ounce by 0933 GMT. U.S. gold futures were 0.3% lower at $1,978.80.
“Hawkish comments by the Fed as it attempts to rein in inflation has clearly had a major impact on gold prices, and we are seeing that through a rally in the U.S. dollar index,” Ross Norman, an independent analyst, said.
“Gold’s failure to hold technical support at the 50-day moving average will likely encourage further tests of the downside,” Norman added.
Traders have scaled back expectations of interest rate cuts this year and expect a 27.3% chance of the Fed raising rates in the June meeting, compared to next to zero last week, according to the CME FedWatch tool.
Non-interest-bearing bullion becomes less attractive in a high-interest-rate environment.
Brian Lan, managing director at dealer GoldSilver Central, noted some profit-taking on the back of a stronger dollar.
The U.S. dollar index held near a seven-week peak, making gold more expensive for those holding other currencies. [USD/]
Gold’s appeal was further dented after U.S. President Joe Biden and top U.S. congressional Republican Kevin McCarthy on Wednesday underscored their determination to reach a deal soon to raise the federal government’s $31.4 trillion debt ceiling and avoid an economically catastrophic default.
The cautious optimism that Washington might be close to a deal to raise the debt ceiling and avert a first-ever default sent Asian shares higher. [MKTS/GLOB]
Gold might bounce into a range of $1,992-$2,003 per ounce as it has found support at $1,975, according to Reuters technical analyst Wang Tao.
Silver slid 1% to $23.48 per ounce, platinum lost 0.7% to $1,061.27, and palladium shed 1.1% at $1,470.91.
(Reporting by Kavya Guduru in Bengaluru; Editing by Simon Cameron-Moore)
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