By Arundhati Sarkar
(Reuters) – Gold prices steadied on Wednesday, as investors fretted over prolonged U.S. debt-limit negotiations, with a firmer dollar keeping prices in check.
Spot gold ticked up 0.1% to $1,991.35 per ounce by 0455 GMT. U.S. gold futures were little changed at $1,995.20.
Gold has been well supported on price dips below $2,000 and with the debt ceiling “process dragging-on, there is some pent-up frustration in the market which is adversely affecting sentiment”, and that could bring safe-haven flows into gold, Tim Waterer, chief market analyst at KCM Trade said. [MKTS/GLOB]
U.S. President Joe Biden and top congressional Republican Kevin McCarthy edged closer to a deal to avoid a looming U.S. debt default, as the threat of an economic nightmare prompted Biden to cut short an Asia trip this week.
Bullion slipped from the $2,000 level on Tuesday after U.S. retail sales and hawkish remarks from Federal Reserve officials drove bets that interest rate cuts may be delayed.
Rival safe-haven dollar, meanwhile, held firm on the day, making gold less appealing for overseas buyers. Higher rates also blunt the non-yielding bullion’s appeal. [USD/]
“Any inflation-fighting rhetoric from Fed officials between now and the June meeting would hinder the gold price,” Waterer further said, adding, the prevailing dollar strength was capping gold’s upside for the time being.
Traders are currently pricing in a 82.1% chance of the U.S. central bank holding rates in June, according to the CME FedWatch tool.
Separately, a resolution of the debt crisis will momentarily see some selling in gold, while in case of a default, “there is no telling how high gold will scream,” said Clifford Bennett, chief economist at ACY Securities.
Spot silver rose 0.1% to $23.76 per ounce after hitting a six weeks low in the previous session.
Platinum gained 0.6% to $1,063.71, and palladium edged 0.3% higher to $1,505.93.
(Reporting by Arundhati Sarkar in Bengaluru; Editing by Sherry Jacob-Phillips, Uttaresh Venkateshwaran and Varun H K)
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