By Kavya Guduru
(Reuters) – Gold prices edged lower on Monday as a tentative deal reached over the weekend to suspend the U.S. debt ceiling, coupled with concerns around higher interest rates for more long, has dampened demand for the non-productive metal.
Spot gold was down 0.1% at $1,944.09 an ounce at 0252 GMT, hovering near two-month lows hit on Friday. US gold futures were listless at $1,943.30.
Hurting gold’s allure as a safe-haven asset, US President Joe Biden said on Sunday he had finalized a budget deal with House Speaker Kevin McCarthy to suspend the 31-year debt ceiling. $.4 trillion through Jan. 1, 2025, and that the deal was ready to go to Congress for a vote.
Additionally, Friday’s data showed that US consumer spending rose more than expected in April and inflation picked up.
The report raised the odds of a 25 basis point hike by the US central bank in June to 65.3% and rates staying there for the rest of the year, according to CME tool FedWatch.
“The fact that the odds of a hike were as low as 17.4% just over a week ago shows how expectations of a Fed pause have been dropped, helping the U.S. dollar to climb for a third week and weigh on gold prices,” City Index senior market said. said analyst Matt Simpson.
Gold, which offers no return of its own, tends to fall out of favor with investors when interest rates rise.
The dollar index was firm and made bullion more expensive for holders of other currencies.
Asian stocks and US equity futures rose as the agreement to suspend the US government debt ceiling ended a protracted stalemate.
Spot silver fell 0.2% to $23.26 an ounce, platinum edged up 0.1% to $1,023.83 and palladium rose 0.3% to 1,428 $.07.
Trading will likely be thin on Monday as the United States and many European markets are closed for the holidays.
(Reporting by Kavya Guduru in Bengaluru; Editing by Sherry Jacob-Phillips)