Bounces Off Two-Month Lows

Gold is trading with minimal movement in the Asia-Pacific session following a slight uptick on Tuesday, closing at 1975.23 (+0.2%). The precious metal rebounded from its two-month lows as investors evaluated the developments in US debt-ceiling negotiations. While Republicans maintained their steadfast stance against any tax changes, rendering a potential deal elusive as emphasized by McCarthy, Democrats persistently pursued initiatives to enhance revenues and reduce spending.

• Amid the looming risk of a potential default, the demand for safe-haven assets surged, propelling gold to its highest price since March 2022 earlier this month. However, gold has experienced a decline of approximately 4% since reaching its peak on May 4th and is currently hovering around levels observed in late March.
• Rising bond yields, a stronger dollar and hawkish comments from Federal Reserve officials have recently put a lid on bullion prices.
• Bloomberg noted that a team of JPMorgan strategists led by Kolanovic trimmed their allocation to stocks and corporate bonds while boosting its stake in cash by 2%. Within the commodities portfolio, the firm also rotated out of energy and into gold on haven demand and as a debt-ceiling hedge. (link)