Gold stagnates as US debt-ceiling talks reach stalemate

Bengaluru — Gold prices moved in a narrow range on Wednesday after another round of talks on the US debt ceiling ended with no deal, while investors awaited minutes of the Federal Reserve’s last policy meeting to gauge the path forward for interest rates.

Spot gold ticked 0.1% lower to $1,973.38 per ounce by 2.57am GMT. US gold futures were steady at $1,975.90.

Representatives of US President Joe Biden and congressional Republicans ended another round of debt-ceiling talks without a resolution on Tuesday as the deadline to raise the government’s $31.4-trillion borrowing limit ticked closer.

The dollar index held firm, making gold less attractive for overseas buyers.

“Focus ahead remains on the debt-ceiling impasse and [the] Fed’s rate-hike cycle,” OCBC FX strategist Christopher Wong said.

“Fed remarks have been noisy and varied, but what is probably clear is that the Fed is saying that a pause is not an end to the tightening cycle, so there is still that risk of [a] hike, dependent on how data pans out.”

Interest-rate hikes raise the opportunity cost of holding non-interest-bearing gold.

Minutes of the Fed’s May 2-3 meeting, when it raised its benchmark overnight interest rate by a quarter of a percentage point to the 5.00%-5.25% range, are due later in the day.

Markets are pricing in a 69.7% chance of the Fed holding rates at its June 13-14 policy meeting, the CME FedWatch tool showed.

Therefore, the core personal consumption expenditures (PCE) data, due on Friday, will be a central focus, and a softer print could ease fears of a hawkish Fed and that could perhaps lend further support to gold, Wong said.

Fed Chair Jerome Powell recently said it was still unclear if US interest rates would need to rise further.

Spot silver fell 0.3% to $23.37 per ounce, while platinum rose 0.1% to $1,049.38. Palladium added 0.5% at $1,453.16.

Reuters