Gold prices remain flat in early trade

15 May 2023 , 02:54 PM

Gold prices remained unchanged on Monday as a steady U.S. dollar offset support to gold demand from broader economic uncertainties and the expectation that the Federal Reserve will stop its interest rate-hike cycle.

Spot gold was dormant at $2,011.04 per ounce. Futures for U.S. gold decreased 0.2% to $2,015.10.

As the dollar grew stronger, foreign buyers found it more difficult to afford bullion priced in the greenback.

According to data released on Friday, consumer confidence in the United States fell to a six-month low in May amid concerns that political wrangling over raising the federal government's borrowing limit would lead to a recession.

President Joe Biden of the United States stated that he anticipates meeting with legislative leaders on Tuesday to discuss a strategy to increase the country's debt ceiling and prevent a disastrous default.

According to the CME FedWatch tool, markets are pricing in an 84.6% likelihood that the U.S. central bank will maintain rates at their present level in June.

The final round of interest rate increases by the European Central Bank is underway, according to ECB Vice President Luis de Guindos, who also cautioned that increased borrowing costs could put stress on banks' asset quality, even if first data are positive.

In times of economic or financial turmoil, safe-haven bullion usually gains, but the appeal of non-yielding gold tends to decrease when interest rates rise.

While demand was poor in other Asian hubs, some dealers in China, the world's largest consumer of gold bullion, offered discounts to draw customers. Last week, physical gold demand rose somewhat in India as local prices declined from recent record highs.

Platinum increased by 0.6% to $1,056.30, and spot silver increased by 0.3% to $23.99 per ounce.

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