Gold prices experienced a rise on Friday as the dollar retreated from a two-month high. However, despite this increase, bullion was on track to record its third consecutive weekly decline. Traders were closely monitoring the progress of US debt ceiling negotiations as well as the next policy move by the Federal Reserve.
At 3.11 am GMT, spot gold saw a 0.3% increase, reaching $1,945.39 per ounce. Earlier, it had hit its lowest level since March 22 at $1,936.59. Meanwhile, US gold futures edged up by 0.1% to $1,945.90 per ounce. Nonetheless, gold had already experienced a 1.6% decline over the course of the week.
Clifford Bennett, the chief economist at ACY Securities, stated that there was a prevailing market expectation that the debt crisis would be resolved. Additionally, the Federal Reserve’s ongoing tightening stance was projected to exert some downward pressure on gold. He further mentioned that the Fed might pause at its next meeting, given the debt ceiling crisis and the underlying banking crisis.
Although the dollar dipped by 0.1% on the day, it remained close to its highest level since March 17. Benchmark Treasury yields were also near the highs observed in March.US President Joe Biden and top congressional Republican Kevin McCarthy appeared to be nearing a deal on Thursday to reduce spending and raise the government’s $31.4 trillion debt ceiling. This negotiation was crucial to avoid the risk of default, and time was running short.
Regarding interest rates, the market was currently pricing in a 39% chance of a 25 basis point hike in June. Furthermore, cuts were not expected to occur until at least September, according to the CME FedWatch tool.Ajay Kedia, director at Kedia Commodities in Mumbai, expressed the belief that gold could still reach $1,980 per ounce or even approach the $2,000 level in June. He attributed this potential rise to steady physical demand in key markets such as India and China, along with prevailing economic uncertainty.
In the silver market, spot silver increased by 0.3% to $22.83 per ounce. Platinum saw a 0.4% climb, reaching $1,024.63, while palladium advanced by 0.3% to $1,420.40 per ounce.In summary, gold prices rose slightly on Friday as the dollar pulled back, but the overall trend indicated a third consecutive weekly decline for bullion.
LTraders closely monitored the progress of US debt ceiling negotiations and the Federal Reserve’s future policy moves. The expectation of a resolution to the debt crisis, combined with the tightening stance of the Federal Reserve, was anticipated to exert downward pressure on gold. However, some analysts believed that gold could still experience a potential increase in the coming weeks, supported by steady physical demand in key markets and ongoing economic uncertainty.
