Gold edges down as dollar strengthens
Gold prices declined on Tuesday even as dollar strengthened against most major rivals as the US debt ceiling talks progress.
The Crisis Continues
Optimism is also growing about US debt ceiling talks following fruitful talks between US President Joe Biden and top Congressional Republican leader Kevin McCarthy.
However, both sides didn't reach a compromise on the debt ceiling crisis, although negotiations are still ongoing and progressing to avoid a catastrophic default.
It's a must that both sides reach a deal to raise the debt ceiling before the end of this week, but sticking points remain.
Mixed Data
Investors await the Federal Reserve's meeting minutes on Wednesday to assess upcoming policy moves by the central banks.
Earlier US data showed new home sales rose 4.1% in April to 683 thousand units from 665 thousand units in March.
US services PMI rose to 55.1 in May, while analysts expected a drop to 52.6 from 53.6.
Conversely, US manufacturing PMI fell to 48.5 in May from 50.2 in the previous reading.
The dollar index thus rose 0.3% as of 18:57 GMT to 103.4, with a session-high at 103.6, and a low at 103.1.
Gold prices stabilized at $1,976.5 an ounce as of 18:58 GMT.
Oil prices climb for second straight day
Oil prices rose in European trade for the second straight day amid growing fears about a supply deficit in the second half of the year.
Optimism is also growing about US debt ceiling talks following fruitful talks between US President Joe Biden and top Congressional Republican leader Kevin McCarthy.
Global Prices
US crude rose 1.5% to $73.11 a barrel, with a session-low at $71.76, while Brent added 1.25% to $77.01 a barrel.
US crude rose 0.4% on Monday, while Brent added 0.1%, the first profit in three days.
The IEA
The EIA warned in its last monthly meeting of an upcoming shortage that might occur in the second half of the year, with demand expected to surpass supplies by nearly 2 million bpd.
The increase is mainly fuelled by improving Chinese demand, in addition to steep output cuts by OPEC+.
US Demand
US demand is also improving as seasonal demand grows on gasoline starting next week in the US.
US Debt Ceiling Talks
US President Joe Biden and top Congressional Republican Kevin McCarthy didn't reach a compromise on the debt ceiling crisis, however negotiations are still ongoing and progressing to avoid a catastrophic default.
American Petroleum Institue
Later today, the American Petroleum Institute will release data on US crude stocks, expected to show an increase for the third week in a row.
Dollar approaches two-month high after aggressive Fed remarks
Dollar rose in European trade for a second session against a basket of major rivals, almost touching two-month highs as US 10-year treasury yields spike.
Such gains came following bullish remarks by Fed officials, which bolstered the case for a 0.25% Fed rate hike June and hurt chances of early rate cuts this year.
Now investors await a batch of important US data later today, which might bolster dollar's gains.
The Index
The dollar index rose 0.4% to 103.61, with a session-low at 103.16.
The index rose 0.1% yesterday, resuming gains after a pause on Friday away from two-month highs at 103.62.
US Yields
US 10-year treasury yields rose 0.9% on Tuesday for the eighth straight session, hitting two-month highs at 3.753%, bolstering dollar's appeal.
Bullish Remarks
Minneapolis Fed President Neil Kashkari said that US interest rates might move above 6% for inflation to fall below 2%, while Saint Louis Fed President James Bullard said the Fed might need to raise interest rates by another 0.5% this year.
Fed Rates
Such remarks boosted chances of a Fed 0.25% rate hike in June from 13% to 30%.
Major Sectors
Now investors await some important US data, including the manufacturing PMI, is expected down to 50.0 this month from 50.2 in April, while the services PMI is expected at 52.6, down from 53.6 last month.
Gold hovers near six-week trough as dollar heaps pressure
Gold prices declined in European trade for a second session, almost touching six-week lows under pressure from the stronger dollar against major rivals.
Recent bullish remarks by Fed officials raised prospects of a 0.25% Fed rate hike in June and hurt chances of early rate cuts this year.
Prices Today
Gold prices fell 0.9% to $1,954 an ounce, with a session-high at $1,972, after losing 0.3% yesterday, resuming losses and hovering near six-week lows at $1,952.
The Dollar
The dollar index rose 0.3% on Tuesday for the second session, almost hitting two-month highs at 103.62 against a basket of major rivals.
Dollar is gaining ground and demand as an alternative investment, making dollar-denominated gold futures costlier to holders of other currencies.
Fed Remarks
Minneapolis Fed President Neil Kashkari said that US interest rates might move above 6% for inflation to fall below 2%, while Saint Louis Fed President James Bullard said the Fed might need to raise interest rates by another 0.5% this year.
Such remarks boosted chances of a Fed 0.25% rate hike in June from 13% to 30%.
Debt Ceiling Talks
US President Joe Biden and top Congressional Republican Kevin McCarthy didn't reach a compromise on the debt ceiling crisis, with negotiations still ongoing to avoid a catastrophic default.
The SPDR
Gold holdings at the SPDR Gold Trust rose 1.15 tones yesterday, the second increase in a row to 943.89 tones, the highest since October 13.