Gold prices decline to the lowest level in 7 weeks – (Update)

Gold prices decline to the lowest level in 7 weeks – (Update)
Gold prices decline to the lowest level in 7 weeks – (Update)

Gold prices fell by more than $8, at the end of trading today, Wednesday, May 17 (2023), to continue bleeding losses for a second day, with the rise of the US dollar, recording its lowest level in 7 weeks.

Investors are wary of the drawn-out negotiations on limiting US debt, as the US Treasury estimates that the US will default early on June 1 if Congress does not raise the debt ceiling.

Gold prices today

At the end of the session, futures contracts for the yellow metal – delivery of June 2023 – fell by 0.4%, equivalent to $ 8.10, recording $ 1984.90 an ounce, which is the lowest level since March 29, 2023.

And gold prices ended their dealings yesterday, Tuesday, May 16, down by about $ 30, to fall below $ 2,000 an ounce for the first time in two weeks, with the rise of the US currency.

By 05:45 pm GMT (08:45 pm Mecca time), the spot price of gold decreased by 0.4%, to $ 1981.77 an ounce, according to information monitored by the specialized energy platform.

At the same time, the price of silver futures contracts – delivery of July 2023 – increased by 0.2%, to $ 23.94 an ounce.

The spot platinum price rose by 1.6%, to reach $1075.38 an ounce, while the spot palladium price fell by 0.5%, to $1493.78 an ounce.

Concurrently, the dollar index – which monitors the performance of the US currency against 6 major currencies – rose by 0.24%, at 102.809 points.

A worker at a goldsmith’s shop inspects gold jewelry – Photo courtesy of Reuters

Gold price analysis

“Gold prices received some support on dips below $2,000 an ounce and as debt ceiling talks continue,” said Tim Waterer, senior market analyst at KCM Trade.

He added, “There is some pent-up frustration in the market that is negatively affecting sentiment, and this could bring safe-haven flows into gold,” according to Reuters.

US President Joe Biden and Republican Congressman Kevin McCarthy are close to reaching an agreement, to avert an imminent US debt default, as the threat of an economic nightmare prompted Biden to cut short his Asia trip this week.

The US President said in a speech today, Wednesday, that he is confident that the United States will not default on its debt.

Gold prices retreated from the $2,000 level yesterday, Tuesday, May 16, after US retail sales and hawkish statements from Federal Reserve officials raised bets on the possibility of delaying interest rate cuts.

interest rates

“Any anti-inflationary rhetoric from Fed officials between now and the June meeting will hamper gold prices,” said KCM Trade senior market analyst Tim Waterer, adding that prevailing dollar strength was capping gold’s rally for the time being.

Traders are currently pricing in a 78.6% chance that the US central bank will hold interest rates in June.

“Separately, the resolution of the debt crisis will see some temporary selling in gold, in the event of a default,” said Clifford Bennett, chief economist at ACI Securities.

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