Gold retreats as US data, Fedspeak sow doubts on rate cuts

May 16 (Reuters) – Gold fell below USD 2,000 on Tuesday after US economic data and hawkish remarks from Federal Reserve officials drove bets that interest rate cuts may be delayed, while traders kept an eye on the US debt-ceiling talks.

Spot gold shed 1.6% to USD 1,987.39 per ounce by 1:40 p.m. EDT (1740 GMT), after touching its lowest in two weeks at USD 1,989.10 earlier.

US gold futures settled 1.5% down at USD 1,993.

US retail sales increased less than expected in April, but the underlying trend was solid, driving an uptick in the dollar and sending 10-year Treasury yields to a two-week high. USD/ US/

Richmond Fed President Thomas Barkin said he was “comfortable” with raising interest rates further if needed to lower inflation. Cleveland Fed chief Loretta Mester said the US central bank was not at a point yet where it can hold rates steady for a period of time.

This followed hawkish comments from other Fed officials on Monday who saw interest rates staying high and, if anything, going higher.

“We needed to see more signs of a pivot from the Federal Reserve and we haven’t really fully seen that yet,” said Craig Erlam, a senior market analyst at OANDA.

High interest rates dull non-yielding bullion’s appeal, although it’s considered a hedge against economic uncertainties.

But overall, traders could keep buying any dip in gold prices “as they wait out this debt ceiling fiasco”, said Phillip Streible, chief market strategist at Blue Line Futures, in Chicago.

Democratic President Joe Biden and top congressional Republican Kevin McCarthy are expected to discuss new work requirements for benefits programs for low-income Americans during Tuesday’s debt-ceiling negotiations, sources familiar with the talks said.

Spot silver slid 1.5% to USD 23.74 per ounce. Platinum lost 0.6% at USD 1,058.41 and palladium fell 2.3% to USD 1,496.54.

(Reporting by Deep Vakil and Kavya Guduru in Bengaluru; Editing by Sherry Jacob-Phillips, Sohini Goswami, Christina Fincher, and Shilpi Majumdar)