Gold slips Monday as investors watch debt ceiling talks concerned that U.S. lawmakers won’t resolve their standoff in time. The yellow metal feeling pressured on news that U.S. President Joe Biden and House Speaker Kevin McCarthy will meet Monday.
Talks to prevent sending the nation’s $31.4 trillion debt into default broke off on Friday. The danger of a default has attracted more haven investors to gold. Futures rallied Friday, however, after Federal Reserve Chairman Jerome Powell said it’s unclear whether U.S. interest rates will need to rise further. Higher interest rates are typically bearish for gold because they make the yellow metal less attractive as an alternate investment, but a pause or an end to the rate hikes would be bullish.
August gold futures fell 1% last week to settle at $2,000.30 an ounce on Comex after the front-month contract rolled to August from June. August futures rose 1.1% Friday. Bullion increased 0.6% in April after gaining 8.1% in March. The metal fell $2.40 in 2022. The August contract is currently down $5.4 (-0.27%) an ounce to $1994.90 and the DG spot price is $1975.20.
Biden and McCarthy are expected to meet Monday afternoon after staff-level discussions resumed Sunday evening.
Investors are also watching some key economic releases this week to determine the Fed’s next moves on monetary policy as it continues to tackle high inflation. The Fed’s favorite inflation measure, the personal consumption expenditures price index, comes out Friday with April data. Consumer sentiment data for May also comes out Friday. Before that, the minutes of the last Fed policy meeting are due out Wednesday, along with the second reading of first quarter GDP.
A number of Fed officials are also set to speak this week, starting Monday with St. Louis’s James Bullard, San Francisco’s Mary Daly, Atlanta’s Raphael Bostic and Richmond’s Tom Barkin.
About 76.7% of investors tracked by the CME FedWatch Tool are betting that the Fed will keep interest rates unchanged at the next meeting in June, while 23.3% expect another 25 basis point rate hike.
The Fed raised rates by another 25 basis points earlier this month. The Fed has raised rates by 25 basis points three times this year following rate hikes of 50 basis points in December and 75 basis points each in June, July, September and November 2022. The federal funds rate is currently at 5.00% to 5.25%.
July silver futures dropped 0.4% last week to settle at $24.06 an ounce on Comex, though the front-month contract rose 1.8% Friday. Silver gained 4.4% in April after increasing 15% in March. It rose 3% in 2022. The July contract is currently down $0.115 (-0.48%) an ounce to $23.945 and the DG spot price is $23.89.
Spot palladium decreased 50 cents last week to $1,540.00 an ounce after rallying 3.9% Friday. Palladium rose 2% last month after gaining 3.7% in March. Palladium lost 5.7% in 2022. The current DG spot price is down $11.80 an ounce to $1537.00.
Spot platinum increased 1.1% last week to $1,076.30 an ounce after advancing 1.8% Friday. Platinum added 8.5% in April after increasing 3.7% in March. Platinum surged 10% in 2022. Currently, the DG spot price is up $10.30 an ounce to $1086.00.
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