Gold looks 'best hedge' as debt-ceiling angst builds, RBC says
Mounting fears over the US debt ceiling crisis will benefit gold as investors brace for potential chaos in financial markets, according to RBC Capital Markets.
Hopes for a deal to avert a first-ever US default were set back after President Joe Biden and House Speaker Kevin McCarthy postponed a meeting set for Friday that had been aimed at resolving the impasse. RBC Capital Markets strategist Christopher Louney said the fraught negotiations had set the stage for a near-term boost to bullion, which is within striking distance of a record high.
“Even assuming a deal is eventually reached, we wouldn’t disregard potential growing financial angst as the deadline approaches,” Louney said in a note. “In the near term, we believe gold looks like the best hedge.”
Meanwhile, markets are pricing in rate cuts later this year, also helping to support non-interest-bearing gold. Those bets have been reinforced by a raft of data this week showing cooling US inflation as initial jobless claims reached the highest since October 2021.
Spot gold edged 0.1% higher to $2 017.07 an ounce as of 8:38 a.m. in Singapore, after sliding 0.7% on Thursday. The Bloomberg Dollar Spot Index was steady, after rising 0.5% in the previous session. Silver was little changed, while platinum and palladium slipped.
