Weighed Down By Debt Ceiling Stand Off & Fedspeak

In Asia-Pacific trade, gold has declined by 0.4% to reach 1963.15, following a modest drop of 0.3% to 1971.86 during Monday's trading session. Investors are carefully evaluating the ongoing US debt-ceiling standoff and the remarks from Federal Reserve officials, which have contributed to the cautious sentiment surrounding gold.

• A deal is one step closer following talks between President Biden and House Speaker McCarthy which has finished. Comments from McCarthy indicate that the meeting was “productive” and that the tone of discussions had improved.
• Given the uncertainties surrounding the debt-ceiling X-date, it is expected that gold trading will continue to be volatile unless a resolution is reached.
• Despite Federal Reserve Chair Powell's recent comments indicating a potential pause, market expectations for a 25bp interest rate hike at the upcoming FOMC meeting in June are slowly rising, currently reaching 22%. This sentiment was reinforced by overnight statements from Fed Bullard, a non-voting member for 2023, who voiced support for two more 25bp rate increases. Additionally, Fed Kashkari, a voting member for 2023, hinted at his preference for further tightening of monetary policy.
• According to a Bloomberg article, gold appears to be in the throes of a triple top, setting up a substantial correction in the coming months. (link)