Spot gold dropped 0.5% to $3,297.33 an ounce by 10:30 a.m. ET, pulling back from a two-week high of $3,345.33. U.S. gold futures mirrored the move, falling 0.6% to $3,294.70 an ounce.
“Selling is coming in, especially from those looking to book profits,” said Ross Norman, an independent market analyst, in comments to Reuters. “A degree of recovery in the dollar seems to have taken some of the shine off gold.”
The pullback follows a sharp rally in gold, fueled in part by mounting concerns over the U.S. government’s growing debt burden and a lackluster response to recent bond auctions. On Wednesday, a 20-year bond sale by the U.S. Treasury met with soft demand, dampening risk appetite and initially boosting demand for safe-haven assets like gold.
Long-Term Outlook Remains Bullish
Despite the short-term dip, analysts maintain a broadly bullish outlook for gold amid ongoing economic uncertainties. Fears surrounding U.S. fiscal stability have intensified in recent weeks, especially following Moody’s downgrade of the country’s last remaining AAA credit rating. These developments, along with inflationary concerns, continue to bolster the appeal of physical gold.
“This situation may be a crisis for many assets, but it’s a perfect outcome for gold,” said Rick Kanda, managing director at The Gold Bullion Company. “Moody’s downgrade signals growing concern over U.S. credit stability, and with inflation fears lingering, investors are turning to gold as a safe haven.”
Kanda added that rising demand for physical bullion reflects a broader shift in investor priorities, which he believes could push prices even higher. “By the looks of things, this is just the beginning,” he said.
Policy Uncertainty Adds to Market Volatility
Adding to the uncertainty is President Donald Trump’s proposed tax-cut bill, which passed a key hurdle in the House of Representatives on Thursday. The legislation is projected to increase the federal debt by several trillion dollars, raising concerns among investors about long-term fiscal sustainability.
“There are concerns about the way the U.S. is managing its debt issue,” said Norman. “One would expect gold to remain relatively firm if the markets take these tax cuts in a negative way.”
Even with the day’s decline, gold continues to trade near historically elevated levels. Analysts suggest that unless the dollar sees a sustained rally or economic data drastically improves, the underlying drivers supporting gold prices are unlikely to fade anytime soon.
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