Gold prices continued their upward trajectory on Thursday, holding comfortably above $3,300 per ounce and nearing a two-week high, as safe-haven demand gains traction amid growing U.S. fiscal concerns and a weakening U.S. dollar. This marks the fourth consecutive day of gains for the precious metal, driven by a mix of domestic and geopolitical risks that have shaken investor confidence.
Key Drivers Behind the Rally
Mounting U.S. Fiscal Concerns
The market continues to react strongly to the U.S. sovereign credit rating downgrade by Moody’s, which cited an unsustainable debt path. These worries were compounded after the House Rules Committee advanced President Donald Trump’s massive tax-and-spending bill, dubbed the “One Big, Beautiful Bill.” The bill is projected to add an estimated $3 trillion to $5 trillion to the national debt over time.
Investor anxiety further intensified after a weak 20-year Treasury bond auction, reflecting poor appetite for U.S. government debt—a signal that fiscal risks are beginning to take a serious toll on investor trust in U.S. financial instruments.
Slumping U.S. Dollar
The U.S. dollar remains depressed, hovering near two-week lows as expectations rise that the Federal Reserve may cut rates again in 2025. This is supported by:
Easing inflationary pressures
Sluggish economic growth forecasts
Soft bond demand
A weaker dollar typically increases the appeal of gold, which is priced in USD, especially for international investors.
Renewed Geopolitical Tensions
Gold’s reputation as a geopolitical hedge is also playing a role:
US-China tensions have escalated after the U.S. issued new guidance against Huawei’s Ascend AI chips, prompting accusations of “unilateral bullying” from China.
Middle East tensions continue to mount, with Israel’s military actions in Gaza and worsening humanitarian conditions.
Russia-Ukraine war shows no signs of easing, with Trump reportedly telling European leaders that Putin is determined to prolong the conflict, believing he’s currently “winning.”
Market Sentiment and Safe-Haven Flow
The combined weight of fiscal instability, geopolitical risks, and expectations of monetary easing has created the perfect environment for safe-haven assets. Investors are now shifting out of riskier assets like equities and U.S. Treasuries, and into gold, which offers a store of value in times of crisis.
Technical Outlook: Bullish Momentum Intact
Gold is currently testing a resistance zone between $3,363 and $3,365. A breakout above this level could set the stage for a move toward:
$3,400, and eventually
All-time highs around $3,500
The market is also eyeing macroeconomic indicators for confirmation of economic trends:
Flash PMI prints for manufacturing and services
U.S. Weekly Jobless Claims
Existing Home Sales data
These releases could influence short-term movements in both the USD and gold prices.
Conclusion
Gold is increasingly being seen as the asset of choice in the current environment, bolstered by:
Weakening confidence in U.S. fiscal management
Monetary policy uncertainty
Ongoing geopolitical turmoil
With the technical outlook aligning with macroeconomic conditions, gold appears poised to challenge key resistance levels, reinforcing its role as a safe-haven champion in 2025.
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