Investing.com– Gold prices traded below key levels on Wednesday as uncertainty over the U.S. debt ceiling sparked a rebound in the dollar and Treasury yields, while copper prices hit over five-month lows on more weak economic signals from China.
Gold also saw a measure of profit taking over the past few sessions, after it surged to record highs earlier this month. But recent losses saw bullion lose the closely-watched $2,000 an ounce support level.
A rebound in the and weighed on the yellow metal, as negotiations continued over raising the U.S. debt ceiling ahead of a June 1 deadline.
Policymakers are expected to continue discussions over the matter this week, although both Democrat and Republican lawmakers have expressed optimism over avoiding a first ever U.S. default.
rose 0.1% to $1,991.76 an ounce, while rose slightly to $1,995.85 an ounce by 20:25 ET (00:25 GMT). Both instruments sank nearly 1.5% each on Tuesday.
Gold also came under pressure from renewed fears of a hawkish Federal Reserve, after a slew of policymakers warned this week that inflation still remained too high, which in turn could elicit more interest rate raises by the central bank.
is now set to speak on Friday and offer more cues on monetary policy.
With U.S. interest rates likely to stay higher for longer, gold may face increased pressure in the near-term as the opportunity cost of holding non-yielding assets increases.
Still, the metal is also expected to remain relatively underpinned by increased safe haven demand, amid growing fears of a U.S. recession this year.
Data released on Tuesday offered a mixed picture of the U.S. economy. While improved marginally in April, fared worse than expected, with consumer spending remaining under pressure from high inflation and interest rates.
Other precious metals were also steady on Wednesday, with and futures rising about 0.1% each.
On the other hand, industrial metals logged steep losses this week following softer-than-expected economic readings from major consumer China.
fell 0.1% to a 5-½ month low of $3.6557 a pound, as data showed that both Chinese and grew less than expected in April.
The readings brewed increased concerns over a slowing economic rebound in China, which could result in weaker commodity demand this year.
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