Gold Futures Settle Higher As Dollar Loses Ground

Gold futures settled higher on Monday, recovering from losses posted in the previous week.

A weak dollar aided bullion’s surge. The dollar index dropped to 102.38, down 0.3% from the previous close.

Traders looked for progress in U.S. debt ceiling talks. U.S. President Joe Biden said Sunday he remains “optimistic” about finding an agreement with his Republican opponents to raise the U.S. debt limit and avoid a default.

Talks between Biden and lawmakers are likely to resume on Tuesday after getting postponed on Friday.

Gold futures for June ended higher by $2.90 or about 0.1% at $2,022.70 an ounce.

Silver futures for July ended up $0.137 at $24.291 an ounce, while Copper futures for July settled at $3.7510 per pound, gaining $0.0225.

“Gold might be ready to make another run to record high territory as investors should be prepared for debt limit talks to hit several major roadblocks,” says Edward Moya, Senior Market Analyst at OANDA. “The US economy is also showing signs it is starting to feel the impact of the Fed’s rate hiking campaign after the Empire Manufacturing survey plunged.”

Moya is of the view that any growing signs of stagflation and risks of more policy tightening by the Fed might complicate gold’s gains.

“Over the short-term, gold still looks attractive given all the uncertainty with US default risks,” he says.

The focus this week will be on data on U.S. retail sales, industrial production, housing starts and existing home sales.

Speeches from several Fed officials, including Fed Chair Jerome Powell, could also significantly impact the mood.

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