Last updated: May 30, 2023, 1:11 AM IST
New York, United States of America (USA)
Gold, which itself offers no return, often falls out of favor with investors when interest rates rise.
Spot gold was broadly unchanged at $1,946.28 an ounce at 9:51 a.m. EDT (1351 GMT), while US gold futures rose 0.1% to $1,945.50
Gold prices surged in holiday-weakened trading Monday near a two-month low as the US debt ceiling agreement eased investor concerns, while the likelihood of the Federal Reserve raising rates dampened demand for precious metals.
Spot gold was broadly unchanged at $1,946.28 an ounce at 9:51 a.m. EDT (1351 GMT), while US gold futures were up 0.1% to $1,945.50.
News from Washington of a debt deal, which has yet to pass Congress, came on a low-volume day while the United States and parts of Europe, including Britain, were on vacation. [MKTS/GLOB]
“Until a few days ago, a majority of investors were betting that the Federal Reserve would hold interest rates steady and not raise them for the next month,” said Carlo Alberto De Casa, outside analyst at Kinesis Money.
Last week’s economic data changed that, with the Fed expected to raise rates at its June 13-14 meeting. Fed Fund futures showed a 59.4% chance of an increase of 25 basis points, peaking at 5.318% in July.
“With a possible rate hike in June by the Fed still in play, it is the dollar and US Treasury bonds that continue to thrive,” said Tim Waterer, chief market analyst at KCM Trade, in a note.
Gold, which itself offers no return, often falls out of favor with investors when interest rates rise.
The dollar index was approaching its two-month peak and weighed on the gold price. A stronger dollar makes bullion more expensive for holders of other currencies. [USD/]
“As long as we stay above $1,900, I don’t see too much risk of further decline,” De Casa said, adding that there could be a small margin for decline.
Spot silver was down 0.5% to $23.20 an ounce, platinum was up 0.4% to $1,026.59, while palladium remained mostly flat at $1,423.17.
(This story has not been edited by News18 staff and was published from a syndicated news agency feed – Reuters)