2023.05.2518:12:00UTC+00Gold Futures Settle Lower As Dollar Continues To Rise

Gold futures settled lower on Thursday, extending losses to a fourth straight session, as the dollar climbed up amid lingering worries about U.S. debt ceiling and rising concerns about European economy.

U.S. House Speaker Kevin McCarthy, R-Calif., told reporters the two sides remain "far apart," with ongoing talks hitting a snag over Republicans' demand for spending cuts.

With just over a week left - including a holiday weekend - U.S. Treasury Secretary Janet Yellen reiterated her dire warning that the U.S. could have a hard time paying its bills.

Fitch Ratings placed the United States "AAA" credit on "rating watch negative," signaling downside risks to U.S. creditworthiness.

The dollar index surged to 104.31, gaining nearly 0.4%, before easing a bit.

Gold futures for June ended lower by $20.90 or about 1.1% at $1,943.70 an ounce, the lowest settlement in 2 months.

Silver futures for July ended down $0.330 at $22.910 an ounce, while Copper futures for July settled at $3.5880 per pound, gaining $0.0265.

Edward Moya, Senior Market Analyst at OANDA says gold prices are easing after a plethora of economic data supported the argument that the economy will continue to fuel inflationary pressures and warrants more Fed tightening. "It looks like Wall Street is pricing in one more Fed rate hike as the consumer is too strong and that won't quickly change as the labor market is only slowly weakening," he adds.

"If stocks continue to rally, that could keep the pressure on gold, with key support coming from the $1950 region. The next round of inflation data might not do gold any favors, but eventually significant debt ceiling market stress should lead to some safe-haven flows for bullion," Moya says.