Gold prices inched lower as hawkish comments from a couple of U.S. Federal Reserve officials on Monday weighed on non-yielding bullion's allure and markets looked for more clarity around the U.S. debt ceiling negotiations.
Spot gold fell 0.2% to $1,973.40 per ounce by 10:45 a.m. ET (1445 GMT). U.S. gold futures fell 0.3% to $1,974.80.
President Joe Biden and House Republican Speaker Kevin McCarthy will today discuss the debt ceiling, which will be closely watched to see if a resolution is reached after negotiations broke off on Friday.
While worries over a deal on the debt-ceiling not being implemented before June 1 could cause some flight to safety buying into gold, the marketplace seems to suspect that a financial crisis can be averted, said Jim Wyckoff, senior analyst at Kitco Metals.
Bullion traders were also watching the dollar closely, which was a major element in the lack of buying interest in the gold market recently, Wyckoff highlighted. [USD/]
Markets now await the minutes of the latest U.S. Federal Open Market Committee meeting due on Wednesday. Markets are currently pricing in an 76.7% chance of rates being held steady next month, the CME FedWatch tool showed.
Minneapolis Fed President Neel Kashkari told CNBC that "it may be that we have to go north of 6%" to get it back to the Fed's 2% target, while St. Louis Fed's James Bullard said there might be the need to go higher on policy rate.
Gold tends to lose appeal in a high rate environment.
"A daily close above trendline resistance could align with debt ceiling positivity allowing the dovish Fed rhetoric to filter through and support gold prices," DailyFX analyst Warren Venketas wrote in a note.
Spot silver fell 0.5% to $23.71 per ounce, platinum gained 0.9% to $1,072.03 while palladium was down 0.4% to $1,507.61.