Gold Prices Plummet Below $2,000 as Economic Data, Fed Dampen Investor Confidence

Gold fell below $2,000 on Tuesday after U.S. economic data and hawkish remarks from Federal Reserve officials drove bets that interest rate cuts may be delayed, while traders kept an eye on the U.S. debt-ceiling talks.

Spot gold was 1.2% down at $1,996.29 per ounce by 11:50 a.m. EDT (1550 GMT), after touching its lowest in two weeks at $1,994.59 earlier.

U.S. gold futures fell 1.1% to $2,000.20.

U.S. retail sales increased less than expected in April, but the underlying trend was solid, driving an uptick in the dollar and sending 10-year Treasury yields to a two-week high. [USD/] [US/]

Richmond Fed President Thomas Barkin said he was “comfortable” with raising interest rates further if needed to lower inflation. Cleveland Fed chief Loretta Mester said the U.S. central bank was not at a point yet where it can hold rates steady for a period of time.

This followed hawkish comments from other Fed officials on Monday.

“We needed to see more signs of a pivot from the Federal Reserve and we haven’t really fully seen that yet,” said Craig Erlam, a senior market analyst at OANDA.

High interest rates dull non-yielding bullion’s appeal, although its considered a hedge against economic uncertainties.

But overall, traders could keep buying any dip in gold prices “as they wait out this debt ceiling fiasco”, said Phillip Streible, chief market strategist at Blue Line Futures, in Chicago.

Democratic President Joe Biden and top congressional Republican Kevin McCarthy will sit down at 3 p.m. EDT to try to make progress on a deal to raise the debt ceiling and avert an economically catastrophic default.

Spot silver slid 1.9% to $23.65 per ounce. Platinum lost 0.4% at $1,060.56 and palladium fell 1.7% to $1,505.88.

(This story has not been edited by News18 staff and is published from a syndicated news agency feed)