Gold prices remain stable as the US debt ceiling standoff continues

23 May 2023 , 08:39 AM

As investors concentrated on the protracted debt ceiling negotiations in the United States after President Joe Biden and the top congressional Republican attempted to reach an agreement, gold prices were steady in early Asian trade on Tuesday.

Spot gold was up 0.1% at $1,971.09 per ounce. Futures for U.S. gold decreased 0.3% to $1,972.10.

With only 10 days left before a potential default that might destroy the U.S. economy, Biden and House Speaker Kevin McCarthy failed to come to an agreement on Monday over how to raise the $31.4 trillion debt ceiling for the U.S. government, but they vowed to continue talking about it.

According to leading Republican negotiator U.S. Representative Patrick McHenry, the White House lacks urgency in resolving the U.S. debt ceiling situation.

James Bullard, president of the St. Louis Fed, suggested that raising the policy rate might be necessary.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, issued a warning, saying that even if it would seem as though the banking industry’s strains had subsided for the time being, history has shown that more problems are not out of the question.

Banks on Wall Street and asset managers have been prepared for the consequences of a potential default in the interim.

According to the CME FedWatch tool, markets are currently pricing in a 74.3% possibility of the Fed keeping interest rates unchanged next month.

Spot silver prices dropped by 0.1% to $23.64 per ounce, platinum dropped by 0.3% to $1,063.97, and palladium dropped by 0.3% to $1,487.07.

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