“Gold Prices Turn Lower as Markets Await Outcome of US Debt Ceiling Negotiations and Powell’s Remarks”

Investing.com – Gold prices turned lower from a recent high on Monday, as markets awaited the outcome of protracted discussions about the US debt ceiling and comments from Federal Reserve Chairman Jerome Powell on Friday supported prices.

President Joe Biden and House Republican Leader Kevin McCarthy will meet today, Monday, to continue negotiations on the US debt ceiling file.

Gold baffles the markets now.. between expectations of moving to record levels, and expectations of a halt in the rise in a changing macroeconomic environment.

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Gold and the dollar now

It fell by 0.22% to $1,977 an ounce.

It fell 0.15% to $1,975 an ounce.

It also decreased to 102,977 points, by 0.1%.

Gold at settlement on Friday

Gold prices rose at the settlement of the past week’s trading, on Friday, as investors evaluated the statements of the Federal Reserve Chairman, which indicated a temporary pause in the Federal Reserve’s tightening of monetary policy.

Upon settlement, gold futures contracts for June delivery increased by 1.1%, or the equivalent of $21.8, to reach $1981.6 an ounce, but fell for the second consecutive week by about 2%.

debt ceiling

“Debt ceiling concerns remain a mainstay of support for gold prices, with talks continuing for another week,” said Matt Simpson, chief market analyst at City Index.

US President Joe Biden and Republican House Speaker Kevin McCarthy will meet to discuss the debt ceiling on Monday, which markets will be watching closely to see if a solution has been reached after negotiations stalled on Friday.

And US President Joe Biden announced, yesterday, Sunday, that he is considering the possibility of resorting to a constitutional mechanism to avoid defaulting the United States, as talks with Republicans stalled over raising the debt ceiling.

“I can’t guarantee they won’t fabricate a default by doing something outrageous,” Biden said at the G7 summit in Hiroshima, stressing, “I’m studying Article 14 (of the US Constitution) to see if we have legal authority” to bypass Congress.

The two parties have only ten days to reach an agreement and allow the United States to continue paying its obligations. And the Republican Speaker of the House wrote on Twitter after a phone call with the Democratic president, “My position has not changed … We will meet tomorrow in person to continue negotiations.” The White House was quick to confirm this information.

Powell’s remarks

Gold prices rose 1% on Friday after Federal Reserve Chairman Powell said it remained unclear whether US interest rates would need to rise further, amid uncertainty over the impact of previous increases on the economy and the recent tightening of bank credit with The fact that it is difficult to control inflation.

US regional bank stocks fell on Friday after CNN reported that Treasury Secretary Janet Yellen told bank CEOs that more mergers may be necessary after a string of bank failures.

Speaking at a central bank conference in Washington, Jerome Powell said: “Failure to slow inflation will increase social costs, but the current tightening of credit conditions means that the interest rate may not need to go up as much as it was supposed to to achieve our goals.”

The yellow metal received support from Powell’s remarks, in addition to the Republicans’ sudden withdrawal from negotiations on raising the debt ceiling, and their announcement of a temporary cessation of talks.

The financial markets are favoring the Federal Reserve’s tendency to fix interest rates during the next monetary policy meeting in June, as the “Investing” tool showed a high probability of maintaining the current range of interest rates to approximately 91.9%.