Gold hovers near a 2-month low in early trade

30 May 2023 , 10:01 AM

Early Asian trading on Tuesday saw little movement in gold prices, which were still hovering close to a two-month low as the dollar’s strength and confidence in an agreement to raise the U.S. debt ceiling reduced demand for the commodity.

Spot gold remained unchanged at $1,942.16 per ounce, not far from a two-month low reached on Friday. Futures for U.S. gold decreased 0.1% to $1,941.80.

The dollar index remained stable, which reduced the appeal of gold for owners of other currencies.

U.S. President Joe Biden stated on Monday that he is optimistic about the chances of the debt ceiling agreement he and Speaker of the House of Representatives Kevin McCarthy reached being approved by Congress.

Nevertheless, a few staunchly conservative Republicans declared that they would oppose an agreement to raise the $31.4 trillion debt ceiling. Now the focus is on getting the agreement through Congress by June 5.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, is concerned about systemic dangers after surviving the financial crisis of 2008. But now that he controls monetary policy in the United States, he is much more concerned about inflation.

Fed officials have recently increased the pressure by adopting a hawkish perspective on interest rates, which has partially offset safe-haven flows in response to the U.S. debt ceiling problem as higher interest rates lessen the allure of zero-yield bullion.

Markets currently assign a 39.2% probability that the Fed will hold interest rates in June.

Spot silver decreased by 0.2% to $23.15 per ounce, while palladium increased by 1.2% to $1,431.71 and platinum increased by 0.2% to $1,027.02.

On the physical market, China, the world’s largest consumer of gold, saw net imports of 49.906 tonnes in April, up from 47.527 tonnes in March. This is the highest level since February.

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