By Arundhati Sarkar
(Reuters) – Gold prices were flat on Monday, as traders looked for more clarity around the U.S. debt ceiling negotiations and the Federal Reserve’s interest rate path.
Spot gold was steady at $1,978.32 per ounce by 0843 GMT, while U.S. gold futures were down 0.2% to $1,978.10.
In the near term, everyone is looking at the debt ceiling talks, otherwise the next catalyst for gold could be a dovish sounding Fed guidance, UBS analyst Giovanni Staunovo said.
U.S. President Joe Biden and House Republican Speaker Kevin McCarthy will meet later in the day to discuss the debt ceiling, which will be closely watched to see if a resolution is reached after negotiations broke off on Friday.
“Gold is taking more of a cue from debt ceiling developments (or lack of) over the Fed meeting, because a U.S. default could occur before the Fed’s next meet, and it would surely have an impact on the Fed’s decision,” City Index senior market analyst Matt Simpson said.
Investors are also hunting for clues on future U.S. central bank interest rate strategy after Fed chair Jerome Powell hinted at a pause in June policy.
The minutes of the latest U.S. Federal Open Market Committee meeting are due on May 24. Markets are pricing in a 87.3% chance of rates being held steady next month, the CME FedWatch tool showed.
However, Lukman Otunuga, senior research analyst at FXTM, said U.S.-debt limit talks might overshadow most key economic reports this week, including the Fed minutes.
“In the meantime, gold remains in a choppy range, trading back above the $1,970 level. If prices slip back under $1,970, gold could test $1,945 and $1,900.”
Gold tends to loose appeal in a high rate environment.
Spot silver fell 0.2% to $23.79 per ounce, while platinum rose 0.8% to $1,071.27. Palladium was steady at $1,512.37.
(Reporting by Arundhati Sarkar and Kavya Guduru in Bengaluru; Editing by Rashmi Aich)
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