As investors flocked to the relative safety of the dollar and U.S. Treasuries in response to mixed U.S. economic data that showed retail sales and the housing index holding up, gold, supposedly a hedge against economic and political troubles, settled below $2,000 for the first time since the beginning of May and after its rally to record highs.

After hitting a session low of $1,989.25, gold for June delivery on the New York Comex ended the day at $1,993 per ounce, down $29.70 or 1.5% from the previous day. Since May 1, it was the benchmark gold futures’ first close below the $2,000 threshold. On May 4, the June gold contract reached an all-time high of $2,085.40.

By 13:40 ET (17:40 GMT), ten minutes after the closure of futures trading, the spot price of gold, which reflects physical exchanges in bullion and is more closely followed than futures by certain traders, was at $1,987.62. The spot contract, which touched a session low of $1,985.59 earlier, had a daily loss of $28.84, or 1.4%. According to data from Investing.com, spot gold reached a new high of $2,073.29 on May 4.

The Dollar Index held steady above 102, and the 10-year U.S. Treasury note yield reached a two-week high of 3.572% during gold’s decline.

While a breakthrough hasn’t happened yet in Washington’s debt-ceiling standoff, there is increasing chatter about what could go into a bipartisan deal that ends the stalemate and avoids a market-shaking default. A second round of debt-ceiling talks between the White House and the top four U.S. lawmakers was scheduled at 15:00 ET.

Ed Moya, an analyst at the online trading platform OANDA, says, “Gold is lower as Wall Street waits for a meaningful update with debt ceiling talks.” He added that the April consumer spending rebound “did not favour the yellow metal.”

Moya said Wall Street is “bracing for something bad to happen”.

However, he added, “No one knows what will be that catalyst.” “It could be a debt ceiling impasse, persistent banking fears, or a much weaker consumer as sticky inflation becomes more noticeable.”

The possibility of a “soft landing” for the American economy remains tenuous, which prevents some investors from investing aggressively in safe havens. There are still too many hazards present for investors to take action. Risk aversion may increase due to concerns about regional banks, the debt ceiling, and a weakened consumer base, but it will probably happen due to a fresh catalyst.

The upside that propelled gold to record highs did not appear to have ended, according to Sunil Kumar Dixit, chief technical strategist at SKCharting.com, who also analysed Tuesday’s trading charts and the drop to below $2,000 an ounce.

“I don’t see any major violation of the primary uptrend so long as the metal stays above $1,975 on a weekly closing basis,” said Dixit.

He said the correction was more a “momentum distribution,” with the $2018-$2,080 level becoming a resistance now for gold, which sits below the Daily Middle Bollinger Band of $2,008.