Gold widens losses after hitting biggest weekly loss since February

Gold bars

Gold prices extended their downtrend at settlement today, May 22, with markets evaluating the Federal Reserve’s monetary policy prospects, amid developments in the US debt ceiling crisis.

During trading today, the US dollar index edged up following hawkish remarks by Fed officials.

Speaking on CNBC, Minneapolis Fed President Neel Kashkari said he could not rule out that the policy rate may need "to have to go north of 6%" to get it back to the US central bank’s 2% target.

It was a "close call" on whether he would vote to lift interest rates or pause the Fed’s tightening cycle when policymakers meet on June 13-14. Kashkari said he is open to postponing the rate hike next month.

He, however, indicated that this temporary halt does not suggest an end to the policy tightening cycle, but rather reflects the need to obtain more information.

Along the same lines, Federal Reserve Bank of St. Louis President James Bullard said he expects the US central bank will need to raise interest rates two times more this year to quell inflation.

“As long as the labor market is so good it is a great time to fight inflation, get it back to target,” he was quoted as saying.

Later today, US President Joe Biden and House Republican Speaker Kevin McCarthy will meet to discuss the country’s debt ceiling woes, following a sudden pause in the relevant negotiations after the withdrawal of Republican negotiators last week.

Bullion for June delivery plunged by 0.20%, or $4.4, to end at $1,977.20 an ounce, after recording $1.970.70 each in early trading.

Meanwhile, the US dollar index, which gauges the greenback's strength against a basket of six currencies, added 0.05% to 103.25 points at 08:43 pm Makkah time.