The price of gold traded below \$1,950 on Tuesday ahead of a vote in Congress to raise the debt ceiling.
As of 11:00 a.m. ET, gold was trading at \$1,945, down 2.5% from the previous day. The precious metal has been on a downward trend since hitting an all-time high of \$2,070 in August 2020.
The debt ceiling vote is scheduled for later today. If Congress fails to raise the debt ceiling, the United States could default on its debt, which would have a devastating impact on the global economy.
Investors are concerned that a default could lead to a sell-off in safe-haven assets, such as gold. As a result, the price of gold is likely to remain volatile ahead of the vote.
In addition to the debt ceiling, investors are also watching the Federal Reserve's plans to raise interest rates. The Fed is expected to raise rates by 50 basis points at its meeting next week, which would be the largest increase since 2000.
Rising interest rates could dampen economic growth, which would in turn reduce demand for gold. As a result, the price of gold could come under pressure in the coming months.
Overall, the price of gold is expected to remain volatile in the near term. The market will continue to be driven by a number of factors, including the debt ceiling, the situation in Ukraine, and the Federal Reserve's plans to raise interest rates.
Experts Weigh In
Several experts have weighed in on the potential impact of the debt ceiling vote on the price of gold.
"If Congress fails to raise the debt ceiling, it would be a major blow to confidence in the U.S. economy and could lead to a sell-off in risk assets, including gold," said Michael Hartnett, chief investment strategist at Bank of America.
"However, if Congress is able to raise the debt ceiling, it would be a positive development for the gold market and could help to boost prices," said Jeffrey Christian, managing director at CPM Group.
Ultimately, the impact of the debt ceiling vote on the price of gold will depend on a number of factors, including the outcome of the vote and the reaction of investors.