With market expectations leaning towards another rate hike in June and the debt ceiling deal ready for a Congress vote, gold is taking a breather just below $1,950 an ounce.
"This is a deal that's good news for ... the American people," Biden told reporters."It takes the threat of catastrophic default off the table, protects our hard-earned and historic economic recovery." Biden urged both the House and Senate to pass the new debt ceiling deal. Republicans have control of the House by 222 to 213, while Democrats control the Senate by 51 to 49.
"Any Senate lawmaker can force procedural votes, holding up the bill for days," Martin wrote in a note Monday."McCarthy and Biden sounded an optimistic tone; others less so. Despite all the uncertainty, economic activity is continuing to hold up well, and U.S. domestic demand started Q2 briskly. We think that if a debt ceiling agreement is reached, the Fed will need to tighten further.
Looking some years ahead, this is bullish for gold, with the U.S. debt projected to hit $50 trillion by 2050, Shiels added."[It] may happen much sooner now, especially if a major economic recession ensues). In the longer-term, the U.S. has not solved its debt problem, and levels are skyrocketing, creating an underlying structural tailwind for gold buying ," she said in a note."Gold fell last week amid signs of resilience in the U.S. economy. Inflation also remains stubbornly high.