Gold prices hover near 2-month low as US debt deal weighs

Gold prices traded in a narrow range on Tuesday, hovering close to a recent two-month low, as optimism over a U.S. debt ceiling deal and reduced bets for a pause in the Federal Reserve’s rate hike policy in June dented the metal’s appeal.

Spot gold was flat at $1,945.19 per ounce by 0253 GMT. U.S. gold futures were listless at $1,944.10.

U.S. President Joe Biden said on Monday he feels good about prospects for passage by Congress of the debt ceiling deal that he reached with House of Representatives Speaker Kevin McCarthy.

The high volatility events such as the U.S. regional banking crisis, and whether or not an agreement would be reached on raising the U.S. debt ceiling are now passing, “reducing the markets interest in gold as investors seek alpha,” Michael Langford, director at corporate advisory AirGuide said.

Fed officials on the other hand have in recent days turned up the heat with a hawkish outlook on interest rates, and that has to some extent also offset safe-haven flows around the U.S. debt ceiling situation as higher interest rates dull the appeal for zero-yield bullion.

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