Economy 2 MIN READ

Gold ticks higher as economic risks persist

May 15, 2023By Reuters

Gold prices edged higher on Monday as the US debt ceiling stalemate and concerns of an economic slowdown steered some traders towards the safe-haven metal.

Spot gold was up 0.2% at USD 2,014.44 per ounce by 0432 GMT, after falling for three sessions. US gold futures were flat at USD 2,019.10.

Recent downside surprises in US economic data have lifted the chances of a recession over the next 12 months, with safe-haven flows providing somewhat of a cushion for gold, said Yeap Jun Rong, a market analyst at IG.

Data on Friday showed US consumer sentiment slumped to a six-month low in May on worries that political haggling over raising the federal government’s borrowing cap could trigger a recession.

US President Joe Biden said he expects to meet with congressional leaders on Tuesday for talks on a plan to raise the nation’s debt limit and avoid a catastrophic default.

Bullion tends to gain during times of economic or financial uncertainty, but higher interest rates dim non-yielding gold’s appeal.

“Gold held onto recent gains, with the precious metal trading just below its record high as the market assesses the Fed’s next move,” ANZ said in a note.

Markets are pricing in an 83.4% chance of the US central bank holding rates at the current level in June, according to the CME FedWatch tool.

But taking some shine off gold, rival safe-haven dollar rose to a five-week high against major peers and made bullion less affordable for buyers holding other currencies.

Spot gold might end its bounce around a resistance at USD 2,031 per ounce, before resuming its fall towards USD 2,003, according to Reuters technical analyst Wang Tao.

Among other precious metals, spot silver rose 0.4% to USD 24.01 per ounce, platinum advanced 0.6% to USD 1,056.19 and palladium was up 0.6% at USD 1,518.06.

(Reporting by Kavya Guduru in Bengaluru; Editing by Sherry Jacob-Phillips, Sohini Goswami and Subhranshu Sahu)

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