Investing.com– Gold prices rose further above key support levels on Wednesday, buoyed largely by safe haven demand amid uncertainty over the U.S. debt limit and slowing economic growth, with focus remaining on key inflation data due later in the day.
A meeting between President Joe Biden and Republican policymakers on Tuesday ended without any tangible progress towards raising the federal debt limit, although Biden reiterated that the U.S. would not default.
But a continued impasse over raising the U.S. spending limit continued to erode sentiment, especially as a June 1 deadline approaches. Concerns over a never before seen U.S. default kept demand for gold largely buoyed.
rose 0.1% to $2,037.38 an ounce, while firmed 0.1% to $2,044.35 an ounce by 20:06 ET (00:06 GMT). Both instruments were trading up about 1% this week.
Gold appears to have established a new support level at $2,000 an ounce, after briefly hitting record highs last week amid increasing fears of a U.S. recession this year. The prospect of a potential pause in the Federal Reserve’s rate hike cycle also buoyed the yellow metal, following somewhat dovish signals from the Fed’s recent meeting.
To that end, focus is now on key inflation data due later in the day, which is likely to factor into the Fed’s decision on rate hikes. While inflation is expected to have retreated slightly in April from the prior month, it is still expected to read well above the Fed’s 2% annual target.
Concerns over slowing U.S. economic growth also supported safe haven demand for gold in recent weeks, as the country grapples with high inflation and interest rates. The Fed recently warned that the U.S. faces a mild recession this year.
Other precious metals advanced on Wednesday, also taking support from increased safe haven demand. rose 0.3% to $1,118.50 an ounce, while added 0.1% to $25.920 an ounce.
Among industrial metals, copper prices traded sideways after falling on Tuesday amid signs of weakening demand in major importer China.
steadied at $3.9050 a pound after falling 0.6% in the prior session.
Chinese missed expectations in April, with copper shipments to the country falling nearly 13% from the prior year amid continued weakness in the real estate and manufacturing sectors.
The trend shows that a post-COVID economic recovery in China may not be as pronounced as initially expected, which is likely to dent copper demand in the near-term.
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