On Thursday, May 11th, gold futures closed lower for the second consecutive day as the market was dragged down by a strong dollar. Meanwhile, investors kept a close eye on the progress of negotiations to raise the US government’s debt ceiling.
Gold futures fell by 0.81%, or $16.60, settling at $2,020.50/ounce, while silver futures declined by 4.81%, or $1.234, closing at $24.424/ounce. Platinum futures fell by 1.26%, or $14.10, to close at $1,105/ounce. Palladium futures were down by 3.2%, or $51.10, to $1,554/ounce.
The strong dollar put pressure on the gold market as gold contracts, priced in dollars, became cheaper for investors holding other currencies. The dollar index, which measures the currency against six major rivals, rose by 0.56% to 102.0525 overnight.
Moreover, the news of a slowdown in US inflation prompted investors to reduce their gold holdings. Previously, gold had been bought as a hedge against inflation risks. The producer price index (PPI) increased by 2.3% in April year on year, the lowest level since January 2021 and below analysts’ expectations of 2.4% from 2.7% in March, according to the US Department of Labor.
Investors are closely watching the second round of debt ceiling talks between President Joe Biden and House Speaker Kevin McCarthy. The negotiations are scheduled for May 12th, following the lack of progress in Tuesday’s talks. McCarthy stated that raising the debt ceiling would require the government to cut spending, an offer that President Biden cannot accept.
If the White House and Congress fail to reach an agreement on raising the debt ceiling by June 1st, the United States will face a historic default, causing significant market disruptions. Therefore, investors will continue to monitor the situation closely.
The Spot Market is Open
Friday, May 12, 2023