Gold prices end in red as US dollar hits two-month peak

Gold prices ended in the red today, May 24, as the US dollar extended gains amid investors’ assessment of the course of US debt ceiling negotiations.

Debt ceiling talks resume today after discussions earlier this week reached a dead-end as Republicans want to resolve the impasse by extracting steep spending cuts that President Joe Biden has so far refused to accept.

“Treasury and President Biden will face very tough choices if Congress does not act to raise the debt ceiling and if we hit the so-called X-date without that occurring,” Treasury Secretary Janet Yellen was quoted as saying.

She further stated, “We no longer see very much likelihood that our resources will enable us to get to the middle or end of June.”

Treasury yields jumped after the release of statements indicating further interest rate hikes. Federal Reserve Governor Christopher Waller said he is concerned about the lack of progress on inflation, and while skipping an interest rate hike at the US central bank's meeting next month may be possible, an end to the hiking campaign is unlikely.

Investors are awaiting the release of the minutes of the Fed’s May meeting later in the day, in order to assess the prospects for US monetary policy.

Bullion for June delivery tumbled 0.50%, or $9.90, to close at $1,964.60 an ounce, after touching $1987.90 in early trading.

Meanwhile, the US dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.30% to reach 103.79 points at 08:32 pm Makkah time, after touching 103.91 points.