Gold futures declined as the U.S. House of Representatives voted to temporarily suspend the nation’s borrowing limit, curbing demand for the precious metal as a haven asset.
The measure, passed 285-144, lifts the government’s $16.4 trillion borrowing limit until May 19. It goes to the Senate, where Majority Leader Harry Reid said lawmakers will pass the measure unchanged and send it to President Barack Obama. Bullion demand from India may be “muted” in the next few days as buyers wait for clarity on details related to this week’s domestic import-tax increase, UBS AG said today.
“The can has been kicked down the road, and so there are no immediate worries,” David Lee, a vice president at Heraeus Precious Metals Management in New York, said in a telephone interview. “There is no good news on the physical side and at the moment there is no incentive for the market to go higher.”
Gold futures for February delivery fell 0.4 percent to settle at $1,686.70 an ounce at 1:45 p.m. on the Comex in New York, declining for the second time in three sessions.
Since 1960, Congress has raised or revised the debt limit 79 times, including 49 times under Republican presidents, according to the Treasury Department. Lawmakers have until March 1 before automatic spending reductions will start and until the end of that month to pass a bill to fund the government.
India raised import duties on gold and platinum to 6 percent from 4 percent.
Silver futures for March delivery rose 0.8 percent to $32.439 an ounce on the Comex. Today’s advance was the seventh straight climb, the longest rally for a most-active contract since August 2011.
On the New York Mercantile Exchange, platinum futures for April delivery fell 0.4 percent to $1,691.80 an ounce.
Palladium futures for March delivery retreated 0.5 percent to $726.20 an ounce on the Nymex.
To contact the reporter on this story: Debarati Roy in New York at email@example.com
To contact the editor responsible for this story: Steve Stroth at firstname.lastname@example.org