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Gold range-bound on firmer dollar, US debt limit uncertainty

May 25, 2023By Reuters

May 25 (Reuters) – Gold prices were flat on Thursday as the dollar advanced to an over two-month high and sapped demand for the greenback-priced metal, while investors awaited further developments in the drawn-out debt ceiling negotiations in Washington.

Spot gold was flat at USD 1,957.09 per ounce by 0519 GMT. US gold futures fell 0.3% to USD 1,958.80.

Rival safe-haven dollar scaled to its highest since mid-March, making gold less attractive for overseas buyers.

Bullion has been attempting to recover from its previous sell-off, but a stronger dollar and higher US Treasury yields continue to keep the upside in check, which seems to override safe-haven flows around the US debt ceiling situation, said Yeap Jun Rong, a market analyst at IG.

US Treasury Secretary Janet Yellen on Wednesday maintained early June as a debt ceiling default deadline and said she will update Congress shortly about government finances.

Negotiators for Democratic President Joe Biden and top congressional Republican Kevin McCarthy held what both sides called productive talks on Wednesday to try to reach a deal to raise the United States’ USD 31.4 trillion debt ceiling and avoid a catastrophic default.

Investors also took stock of minutes of the May 2-3 Federal Reserve meeting that showed policymakers “generally agreed” last month that the need for further interest rate increases “had become less certain,” with several saying the quarter-percentage-point hike they approved might be the last.

Investors will also scan US GDP estimates and initial jobless claims due at 1230 GMT for guidance on the economy’s health.

Spot silver fell 0.2% to USD 23.03 per ounce, platinum eased 0.3% to USD 1,021.23, and palladium edged 0.1% lower to USD 1,413.96.

“Platinum is regaining investor attention as fundamentals improve. South African mining challenges weigh on supply recovery this year, while demand is getting support from gold as well as the ongoing substitution away from palladium,” ANZ said in a note.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Shailesh Kuber, Sohini Goswami and Sherry Jacob-Phillips)


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