Investing.com– Gold prices steadied above two-month lows on Wednesday, benefiting from some profit taking in the dollar as markets awaited more cues on the raising of the U.S. debt ceiling, while copper prices were headed for steep losses in May.
A slew of U.S. economic readings were also on tap this week, with data for May, due on Friday, set to largely factor into the Federal Reserve’s plans for more rate hikes.
The retreated from 10-week highs amid some profit taking and in anticipation of the data. But an increasingly hawkish outlook on the Fed kept the greenback relatively underpinned, while darkening the outlook for non-yielding assets such as gold.
Rising interest rates push up the opportunity cost of investing in non-yielding assets- a trend that battered gold through 2022.
Still, the yellow metal may see increased safe haven demand in the event of a U.S. default, which is likely to trigger a recession. U.S. lawmakers are set to vote this week on passing a bipartisan bill to raise the debt ceiling and avert an economic crisis.
But several Republican and Democrat lawmakers have signaled discontent with the bill, and plan to vote against it in Congress.
was flat at $1,959.34 an ounce, while steadied at $1,977.65 an ounce by 20:51 ET (00:51GMT). Both instruments rallied nearly 1% on Tuesday, recovering from over two-month lows.
The yellow metal had tumbled from record highs hit earlier in May, and was now set to clock a monthly loss of over 1%. A bulk of this weakness came from that the Federal Reserve will raise interest rates further in June, amid sticky inflation and resilience in the jobs market.
The Fed is also set to keep interest rates higher for longer.
These factors, coupled with signs of worsening economic conditions across the globe, saw copper prices on course for their worst monthly drop in 11 months. Prices of the red metal also traded just above their weakest levels in nearly seven months.
were flat at $3.6623 a pound on Wednesday. But they were set to lose nearly 6% in May, battered by a string of weaker-than-expected manufacturing activity readings from major economies.
Focus is now squarely on from China, for more cues on how an economic recovery in faring in the world’s largest copper importer. Weaker-than-expected readings for April had triggered steep losses in copper, as markets feared a slowdown in Chinese demand.
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