Investing.com– Gold prices rose on Thursday, extending a recovery from two-month lows amid resurgent bets that the Federal Reserve will hold interest rates steady in June, while a bill to raise the U.S. debt ceiling drew closer towards passing after being approved by the House of Representatives.
Philadelphia Fed President Patrick Harker said on Wednesday that skipping a rate hike during the June 14 meeting could allow the bank more time to consider future rate decisions.
While Harker specified that the Fed could still raise rates after June, his comments triggered a sharp jump in – a reversal from the earlier consensus that the Fed would hike rates by 25 basis points in June.
The trend offered some relief to gold prices, which sank to two-month lows earlier this week on expectations of more pressure from higher interest rates. Rising interest rates push up the opportunity cost of holding non-yielding assets such as gold, weighing on investor demand.
rose 0.2% to $1,966.42 an ounce, while rose 0.1% to a two-week high of $1,983.40 an ounce by 20:36 ET (00:36 GMT). Both instruments were also trading higher for the week, as they recovered from a two-month low hit earlier.
The fell 0.2% in Asian trade, also benefiting metal prices. But the greenback still remained close to 10-week highs hit in May, buoyed by the prospect of higher-for-longer U.S. rates, with markets now awaiting data, due on Friday, for more potential cues on monetary policy.
Focus also remained on an ongoing vote in Congress to raise the U.S. debt ceiling. The House of Representatives voted in favor of the bill, sending it to a next vote in the Senate ahead of a Monday deadline for a U.S. default.
Still, gold may see more bids this year, especially as global economic conditions deteriorate. Recent data showed that a post-reopening economic recovery in China was , while manufacturing activity in the U.S. and Euro Zone was also slowing substantially.
This weighed heavily on industrial metal prices, with copper sinking to a near seven-month low in May.
fell 0.1% to $3.6627 a pound on Thursday, after tumbling over 5% through May.
The outlook for the red metal has become severely crimped by fears of a global economic slowdown this year, which could erode demand.
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