Safe Haven Demand Wanes, Debt Ceiling Deal

Gold is little changed at 1945.63 in the Asia-Pacific session, after touching the lowest level since March 22 on Friday, before closing at 1946.46 (+0.2%).

• Demand for safe havens may continue to wane after news of a bipartisan debt ceiling agreement. The agreement entails the suspension of the debt limit for the next two years, while non-defence spending remains unchanged for the upcoming year (with a subsequent 1% increase in the second year). The announcement was made on Saturday.
• The real challenge lies ahead: garnering enough support from lawmakers on both sides of the political spectrum. According to The New York Times, Republican lawmakers have a track record of employing every possible means to hinder spending deals they oppose. They possess the necessary leverage to potentially derail the agreement since McCarthy's majority stands at a mere nine votes.
• Bullion will also face the challenge of coping with the hawkish re-pricing of the Fed funds path observed last week. This challenge may intensify if this week's jobs report continues to show strong numbers.