Gold Futures Settle Lower As Dollar Rises

Gold prices fell on Tuesday, hurt by a stronger dollar amid bets the Federal Reserve will raise interest rates, and on hopes the U.S. would avert a debt default.

The dollar gained and yields on one-month U.S. Treasury bills jumped to a record high after Federal Reserve Bank of St. Louis President James Bullard backed two more interest-rate increases in 2023 and his Minneapolis colleague Neel Kashkari cautioned against reading too much into a June pause.

The resumption of U.S. debt ceiling negotiations spurred some hopes that the U.S. may avoid a catastrophic debt default.

A statement from President Joe Biden described the meeting with House Speaker Kevin McCarthy, R-Calif., on Monday as “productive” and said he “reiterated once again that default is off the table.”

“While there are areas of disagreement, the Speaker and I, and his lead negotiators Chairman McHenry and Congressman Graves, and our staffs will continue to discuss the path forward,” Biden said.

The dollar index climbed to 103.65 and despite easing to 103.50, remains positive, gaining nearly 0.3% over the previous close.

Gold futures for June ended down $2.70 or about 0.1% at $1,974.50 an ounce.

Silver futures for July ended lower by $0.237 at $23.624 an ounce, while Copper futures for July settled at $3.6545 per pound, down $0.0305 from the previous close.

On the U.S. economic front, the Commerce Department released a report showing new home sales in the U.S. unexpectedly spiked to their highest level in a year in the month of April.

The report said new home sales jumped by 4.1% to an annual rate of 683,000 in April after surging by 4% to a revised rate of 656,000 in March.

Economists had expected new home sales to decrease to an annual rate of 670,000 from the 683,000 originally reported for the previous month.

With the unexpected increase, new home sales reached their highest level since hitting a rate of 707,000 in March of 2022.

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