Gold prices were flat in early Asian trade on Thursday as markets focused on the U.S. debt-limit negotiations, with a firmer dollar capping gains after traders dialled back expectations of a rate cut this year by the Federal Reserve.

 

FUNDAMENTALS

* Spot gold steadied at $1,982.85 per ounce by 0046 GMT, while U.S. gold futures were also listless at $1,985.30.

* The dollar index held firm after hitting a seven-week high in the previous session, making gold less attractive for overseas investors.

* U.S. President Joe Biden and top congressional Republican Kevin McCarthy on Wednesday underscored their determination to reach a deal soon to raise the federal government's $31.4 trillion debt ceiling and avoid an economically catastrophic default.

* U.S. Treasury yields rose on Wednesday amid some cautious optimism around lawmakers' talks to raise the U.S. debt ceiling and on the back of strengthening expectations of higher-for-longer interest rates.

* Risks to the economic outlook at a time of rapid Federal Reserve rate hikes remain high, even as they eased a bit, according to a report Wednesday from the Federal Reserve Bank of New York.

* Markets are currently pricing in a 71.6% chance of the U.S. central bank holding rates at the current level in June, according to the CME FedWatch tool.

* While gold is considered a hedge against inflation, rising interest rates dull non-yielding bullion's appeal.

* Spot silver rose 0.2% to $23.77 per ounce, platinum ticked up 0.1% to $1,069.90, while palladium was flat at $1,486.43.

 

DATA/EVENTS (GMT) 1230 US Initial Jobless Clm Weekly 1230 US Philly Fed Business Indx May 1400 US Existing Home Sales April

 

(Reporting by Arundhati Sarkar in Bengaluru; Editing by Sherry Jacob-Phillips)