Gold prices climbed to a two-week high as investors turned to the precious metal amid growing worries about the rising US government debt and weak demand for long-term Treasury bonds. On Thursday, spot gold rose by 0.7 per cent to $3,336.43 per ounce (approximately £2,690), marking its highest level since early May. At the same time, US gold futures increased to $3,337.60 (around £2,691).
The price rise comes as the US dollar hovered near its lowest point in two weeks, making dollar-priced gold more affordable for foreign buyers. This depreciation in the dollar, combined with ongoing risks of stagflation — a situation where inflation remains high but economic growth slows — has strengthened gold’s appeal as a safe haven.
Kelvin Wong, a senior market analyst for Asia-Pacific at OANDA, noted that the weakening US dollar alongside persistent economic challenges in the US economy is underpinning this bullish trend in gold.
Further fuelling investor anxiety, the Republican-controlled US House Rules Committee recently approved a bill proposed by former President Donald Trump to drastically cut taxes and spending. This move is setting up a key vote in the House of Representatives and adds uncertainty to the fiscal outlook.
Meanwhile, the US Treasury Department experienced weak demand for a $16 billion (about £12.9 billion) sale of 20-year government bonds. The lacklustre response has contributed to pressure on the US dollar and Wall Street markets. Traders remain cautious, especially after Moody’s downgraded the US credit rating from its top AAA status last week.
Ilya Spivak, head of global macro at Tastylive, said that gold seems to be resuming its long-term upward trajectory after failing to sustain levels below $3,200 (roughly £2,580). He predicts gold prices could reach highs around $3,450 to $3,500 (£2,780 to £2,820) later this year.
Gold remains a trusted investment in times of economic and geopolitical uncertainty, thriving particularly in environments with low interest rates. On the international front, the fifth round of nuclear negotiations between the US and Iran is set to take place in Rome on May 23, adding further geopolitical factors to watch.
Other precious metals showed mixed movements, with silver rising nearly 1 per cent to $33.66 (about £27.10) per ounce, platinum slipping 0.4 per cent to $1,072.43 (£864), and palladium dropping 1.4 per cent to $1,023.50 (£825).
