Gold prices tick higher as economic risks persist

Gold prices edged up on Monday as the US debt ceiling stalemate and concerns of an economic slowdown steered some traders towards the safe-haven metal.

Spot gold was up 0.1 per cent at $2,013.79 per ounce by 0249 GMT, after falling for three sessions. US gold futures eased 0.1 per cent to $2,018.20.

Recent downside surprises in US economic data have lifted the chances of a recession over the next 12 months, with safe-haven flows providing somewhat of a cushion for gold, said Yeap Jun Rong, market analyst at IG.

Friday's data showed US consumer sentiment slumped to a six-month low in May on worries that political haggling over raising the federal government's borrowing cap could trigger a recession.

US President Joe Biden said he expects to meet with congressional leaders on Tuesday for talks on a plan to raise the nation's debt limit and avoid a catastrophic default.

Bullion tends to gain during times of economic or financial uncertainty, but higher interest rates dim non-yielding gold's appeal.

"Gold held onto recent gains, with the precious metal trading just below its record high as the market assesses the Fed's next move," ANZ said in a note.

Markets are pricing in a 77.7 per cent chance of the US central bank holding rates at the current level in June, according to the CME FedWatch tool.

But taking some shine off gold, rival safe-haven dollar rose to a five-week high against major peers and made bullion less affordable for overseas buyers.

"Near-term, (gold) prices remain locked in a rising channel pattern since late March this year, while the key psychological $2,000 level will remain a key support to defend," IG's Yeap said.

Spot silver rose 0.4 per cenet to $24.01 per ounce, platinum advanced 0.3 per cent to $1,052.44, while palladium was listless at $1,509.91.