Congressional leaders on both sides of the aisle failed to reach a consensus on raising the debt limit on Tuesday. What’s gold to do with it?

Gold prices slumped on Tuesday after President Joe Biden and Congress leaders ended a meeting without making any progress toward a debt limit deal. Effectively, the American economy will be thrown into default as soon as June 1 if policymakers fail to come together.

In that environment, prices of the yellow metal dropped 1.5% yesterday to slide below $2,000 and hit a session low of $1,985 per troy ounce. Contributing to the decline was a firmer dollar. Since early May, when gold hovered near an all-time record high, bullion prices have lost about 5%.

So what is gold’s relationship with the debt ceiling? The Treasury coffers are being emptied at a fast clip as the US government has hit its $31.4tn debt limit. With a potential market tantrum in a no-deal scenario, gold could quickly find itself into the spotlight should investors decide to move away from dollars and stocks and into traditional safe-haven assets.