Gold prices flat as steady dollar counters economic risks

Gold prices were flat on Monday as a steady U.S. dollar countered support from wider economic risks and expectations that the Federal Reserve would pause its interest rate-hike cycle.

FUNDAMENTALS

Spot gold was listless at $2,011.04 per ounce by 0049 GMT. U.S. gold futures fell 0.2% to $2,015.10.

The dollar edged higher, making greenback-priced bullion less affordable for overseas buyers.

Data on Friday showed U.S. consumer sentiment slumped to a six-month low in May on worries that political haggling over raising the federal government’s borrowing cap could trigger a recession.

U.S. President Joe Biden said he expects to meet with congressional leaders on Tuesday for talks on a plan to raise the nation’s debt limit and avoid a catastrophic default.

Markets are pricing in an 84.6% chance of the U.S. central bank holding rates at the current level in June, according to the CME FedWatch tool.

European Central Bank interest rate hikes are in their final stretch, said ECB Vice President Luis de Guindos, while warning that higher borrowing costs could put stress on banks’ asset quality, even if indicators so far remain healthy.

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