“Gold Prices Continue to Decline – US Debt Ceiling Negotiations and Dollar Strength Affecting Market Sentiment”

Investing.com – Gold prices fell on Wednesday, after falling below $2,000 an ounce yesterday, as investors fretted about the US debt ceiling negotiations, in conjunction with the rise of the US dollar.

America’s Bankruptcy: Debt Default and the End of … What If?

Gold and the dollar now

It fell 0.07% to 1992 dollars the strongest.

While it fell to 1988 dollars an ounce, by 0.06%.

On the other hand, the dollar index rose by 0.14% to 102.555 points.

Gold settled yesterday

Gold prices fell to their lowest level in two weeks at the settlement of trading, yesterday, Tuesday, with the release of economic data that represented support for the dollar, in light of more statements indicating the continuation of monetary tightening in the United States.

Data showed that the confidence of homebuilders in the United States rose to its highest level in ten months, and industrial production recorded unexpected growth after two months of stability, as well as retail sales rose by 0.4% on a monthly basis, after contracting by 0.7% in March.

Upon settlement, gold futures fell by 1.5%, or $29.7, to reach $1993 an ounce, after reaching $1989.1 during trading.

If you are a beginner trader, then is the forex market your chance to make huge profits. A giant market between major whales and giant investment banks, so where are the children?

Know where it is heading and its impact on global currencies through this webinar.. To register, click here

The market is frustrated

“With the debt ceiling process being delayed, there is some pent-up frustration in the market which is negatively affecting sentiment,” said Tim Waterer, Senior Market Analyst at KCM Trade.

US President Joe Biden and top Republican in Congress Kevin McCarthy are close to reaching a deal to avert a looming US debt default, as the threat of an economic nightmare prompted Biden to cut short a trip to Asia this week.

Bullion retreated from the $2,000 level on Tuesday after US retail sales and hawkish comments from Federal Reserve officials led to a delay in interest rate cuts.

Meanwhile, the rival safe-haven dollar held firm that day, making gold less attractive to foreign buyers. Higher interest rates also make non-yielding bullion less attractive.

“Any anti-inflation rhetoric from Fed officials between now and the June meeting will hold back the price of gold,” Waterer added, adding that the prevailing strength of the dollar was capping gold’s upside.

Traders are currently pricing in an 82.1% chance of the US central bank keeping interest rates in June at current levels, according to CME FedWatch.

Separately, Clifford Bennett, chief economist at ACY Securities, said the resolution of the debt crisis would see some gold temporarily sold off, while in the event of a default, it would continue its jumps.

Also read:

Fed remarks yesterday

State bank member Rafael Bostick said yesterday that he believes that the worst scenario that the Fed may have to face at the current stage is that unemployment rates begin to increase at a time when inflation remains entrenched and resists decline, indicating that this will then put tremendous pressure on the US Federal Reserve.

While US Federal Reserve member John Williams said, yesterday, Tuesday, that the economy is facing unacceptably high inflation, and inflation has begun to move gradually in the right direction. As the US Federal Reserve expects the economy to continue to grow this year.

Cleveland Bank President Loretta Mester said on Tuesday that the US central bank remains committed to lowering inflation, noting that the current rate may not be the final one.

“The Fed is committed to returning inflation to its 2 percent target,” Mester said in a letter text.

And she continued: The data shows us that interest rates are not sufficiently restrictive.

“I need to see more evidence of inflation going down, as prices are still high, and we have to stick with what we’re doing,” she added.

“We all know that high inflation makes it very difficult for people to make ends meet,” she emphasized, adding, “It is a particularly burdensome burden for people and companies that have fewer resources.”

“I don’t think the current interest rate is final. However, there are four weeks left until the next meeting, we should see more data.”