Gold climbs on dollar dip, but prices set for weekly drop

6 days ago 71

By Arundhati Sarkar
(Reuters) – Gold prices rose on Friday after the dollar retreated from a two-month high, although bullion was poised for a third straight weekly drop as traders assessed the progress of the U.S. debt ceiling negotiations and the Federal Reserve’s next policy move.

Spot gold rose 0.5% to $1,950.39 per ounce by 0647 GMT, after touching its lowest since March 22 at $1,936.59. U.S. gold futures added 0.4% to $1,950.60.

Still, bullion has lost 1.3% so far in the week.

Overwhelmingly, the market anticipates the debt crisis will be resolved, and that “a tightening horizon” will put downward pressure on gold, Clifford Bennett, chief economist at ACY Securities, said.

“The Fed may indeed pause at the next meeting, as they should, given both the debt ceiling crisis, even with a resolution, and the ongoing, albeit in the background, banking crisis,” Bennett said.

The dollar dipped 0.2%, but hovered near its highest level since March 17. Benchmark Treasury yields were also near highs seen in March.

U.S. President Joe Biden and top congressional Republican Kevin McCarthy on Thursday appeared to be near a deal to cut spending and raise the government’s $31.4 trillion debt ceiling, with little time to spare to head off the risk of default.

Markets are pricing in a 37.8% chance of a 25-basis-point hike in June, according to the CME FedWatch tool.

Further tightening is not ruled out, but buying could emerge after recent price correction, ANZ commodity strategist Soni Kumari said.

On the data front, investors will scan the personal consumption expenditure (PCE) figures due at 1230 GMT.

Spot silver rose 1.2% to $23.04 per ounce, but was on track for a third consecutive weekly dip.

Platinum advanced 0.9% to $1,029.33, and palladium climbed 1% to $1,430.79.

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Subhranshu Sahu, Sonia Cheema, Sherry Jacob-Phillips and Barbara Lewis)

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