Yahoo Finance Gold ends above $1,980, surviving bruising week on extended U.S. debt drama
Investing.com -- The U.S. debt drama is flashing red again, helping gold bulls see green.
A fresh breakdown in talks to raise the U.S. debt ceiling drove the dollar lower on Friday for the first time in five sessions, helping alternative safe havens, led by gold, to rally.
It has been a bruising week for gold bulls, who almost lost the recent upward trajectory in the metal after its rally earlier this month to record highs.
Gold for June delivery on New York’s Comex settled Friday’s session at $1,981.60 an ounce, up $21.80, or 1.1% on the day. But the benchmark gold futures contract fell to as low as $1,954.40 in the previous session, after hitting an all-time high of $2,085.40 on May 4. For the week, June gold was off 2%.
The spot price of gold, which reflects physical trades in bullion and is more closely followed than futures by some traders, was at $1,954.12 by 14:06 ET (18:06 GMT) Friday, up $24.72, or 1.3% on the day. Spot gold, however, fell to as low as $1,952.03 in the previous session, after a record high of $2,073.29 earlier this month, according to Investing.com data. For the week, spot gold was down 1.5%.
Had gold broken below $1,940, the yellow metal’s upside might have been over from a chart perspective, said Sunil Kumar Dixit, chief technical strategist at SKCharting.com.
But help for gold came on Friday in the form of fresh trouble in U.S. debt crisis negotiations.
President Joe Biden and his main Republican rival in Congress Kevin McCarthy had previously said they are closer than before to a deal to raise the $31.4 trillion U.S. debt ceiling, and that a conclusion could come as early as Sunday to avoid a federal default on payments by June 1.
But media reports on Friday suggested that the talks were going nowhere.
“White House is not being reasonable,” said a headline citing Republican debt negotiators. Another, which ran on Fortune.com and quoting Republican negotiator Garret Graves, was more affirmative on the standoff. “It’s time to press pause because it’s just not productive,” Graves was quoted as telling reporters.
McCarthy himself told reporters: “We’ve got to get movement from the White House, and we don’t have any movement yet.” He added that he and Biden had not spoken on Friday.
“A big risk for debt-limit talks [was] that negotiations were too easy and that could have triggered an early vote,” said Ed Moya, analyst at online trading platform OANDA, comparing the situation with the bailout package negotiations during the 2008-2009 Great Financial Crisis. “Wall Street has seen this movie before and we needed to see some tension amongst negotiators, in order for a reasonable deal to be reached.”
Also boosting gold was a weaker dollar, which makes commodities priced in the greenback more affordable to holders of other currencies. The Dollar Index was down for the first time in five sessions on the dimmed hopes for a quick debt ceiling deal.
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