Investing.com -- Gold prices traded below key levels on Wednesday as uncertainty over the U.S. debt ceiling sparked a rebound in the dollar and Treasury yields, while copper prices hit over five-month lows on more weak economic signals from China.
Gold also saw a measure of profit taking over the past few sessions, after it surged to record highs earlier this month. But recent losses saw bullion lose the closely-watched $2,000 an ounce support level.
Policymakers are expected to continue discussions over the matter this week, although both Democrat and Republican lawmakers have expressed optimism over avoiding a first-ever U.S. default.
Gold also came under pressure from renewed fears of a hawkish Federal Reserve, after a slew of policymakers warned this week that inflation still remained too high, which in turn could elicit more interest rate raises by the central bank.
Fed Chair Jerome Powell is now set to speak on Friday and offer more cues on monetary policy.
With U.S. interest rates likely to stay higher for longer, gold may face increased pressure in the near-term as the opportunity cost of holding non-yielding assets increases.
Still, the metal is also expected to remain relatively underpinned by increased safe haven demand, amid growing fears of a U.S. recession this year.
Data released on Tuesday offered a mixed picture of the U.S. economy. While industrial production improved marginally in April, retail sales fared worse than expected, with consumer spending remaining under pressure from high inflation and interest rates.
On the other hand, industrial metals logged steep losses this week following softer-than-expected economic readings from major consumer China.
The readings brewed increased concerns over a slowing economic rebound in China, which could result in weaker commodity demand this year.
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