🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Gold, copper prices struggle as debt ceiling negotiations continue

Published 2023/05/23, 02:54
© Reuters
XAU/USD
-
XAG/USD
-
GC
-
HG
-
SI
-
PL
-
DXY
-

Investing.com -- Gold prices ticked lower on Tuesday, negating a short-lived recovery as markets remained focused on negotiations over raising the U.S. spending limit, while copper steadied after logging steep losses in recent sessions.

Positive comments from Democrat and Republican lawmakers over reaching a potential deal also kept safe haven demand for the yellow metal limited, as House Speaker Kevin McCarthy said that a U.S. default was unlikely.

Gold has seen little support over the past week as uncertainty over the debt ceiling crept into markets, although a heavy dose of profit taking pulled the yellow metal down from record highs hit earlier in May.

Spot gold fell 0.1% to $1,970.45 an ounce, while gold futures fell 0.3% to $1,972.25 an ounce by 20:32 ET (00:32 GMT).

Other precious metals also retreated, with platinum and silver futures down in a flat-to-low range.

Among industrial metals, copper prices rose slightly on Monday, but were trading close to a seven-month low as uncertainty over the debt ceiling and fears of a global recession weighed heavily in recent sessions.

Copper futures rose 0.1% to $3.6822 a pound. The red metal was trading down over 5% for May after a string of disappointing economic readings from China pointed to a weak outlook for copper demand.

Fears of slowing economic growth had battered industrial metal prices in recent weeks, as weak readings from the U.S. and China continued to trickle in.

Resilience in the dollar also weighed on metal prices, with the greenback strengthening in recent sessions as markets bet that U.S. interest rates will likely remain higher for longer.

Fed Fund futures show that while traders are positioning for a pause in the Federal Reserve’s rate hike cycle in June, they are also dialing back their expectations for any rate cuts this year. The Fed has largely downplayed any possibility of a rate cut this year.

The prospect of high U.S. interest rates bodes poorly for non-yielding assets such as metals, given that it increases the opportunity cost of investing in them. This trend had battered metal prices through 2022, especially as U.S. interest rates rose sharply.

Focus this week is now on more U.S. economic indicators, as well as the minutes of the Fed’s May meeting, which are due on Wednesday. Markets will be watching for any more signs that the Fed plans to pause its rate hike cycle in June.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.