Gold prices hit a two-week high on Thursday as investors shifted further toward safe-haven assets amid fears over the U.S. government’s growing debt and low demand for 20-year Treasury bonds.
In Dubai, gold rates rose, with 24-carat gold and 22-carat gold increasing by AED3.5 to AED401.25 and AED371.75, respectively. Additionally, 21-carat gold gained AED3 to AED356.25, while 18-carat gold rose AED2.75 to AED305.5.
Globally, spot gold rose 0.61 percent to $3,334.7 at 4:08 GMT, after hitting its highest since May 9. Meanwhile, U.S. gold futures climbed 0.65 percent to $3,334.89.
The U.S. dollar was hovering near the two-week low it hit in the previous session, making gold cheaper for other currency holders.
U.S. tax cut bill clouds fiscal outlook
Gold prices reversed their downward trend, supported by a weaker U.S. dollar and growing fears of stagflation in the U.S. economy. On Wednesday, the U.S. House of Representatives Rules Committee voted to advance President Donald Trump’s sweeping tax cut and spending bill, setting the stage for a vote on the House floor in the coming hours.
The highly anticipated “One Big, Beautiful Bill” could add around $3-$5 trillion to the country’s debt pile.
In addition, the U.S. Treasury Department saw lower demand for a $16 billion sale of 20-year bonds on Wednesday, which was weighing both the dollar and Wall Street.
Trader sentiment was already impacted after Moody’s cut the U.S. triple-A credit rating last week. Amid mounting economic concerns, gold is seen as a safe investment that thrives in a low-interest-rate environment. Bullion prices had hit a record high of $3,500.05 last month.
U.S. dollar falls on mounting fiscal concerns
Meanwhile, the dollar has been trending lower amid U.S. fiscal concerns. In addition, expectations that the Federal Reserve will lower interest rates further this year continued to push the dollar lower, further supporting the rise in gold prices to a two-week peak.
Traders are now anticipating that the Fed will begin cutting rates again in October, projecting approximately 54 basis points of cuts by the end of 2025.
On the geopolitical front, the fifth round of nuclear talks between Iran and the United States will take place on May 23 in Rome, Oman’s foreign minister said on Wednesday.
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Other precious metals
As gold prices rose to a two-week high, the precious metals market was mixed. Spot silver gained 0.64 percent to $33.59. However, platinum fell 0.35 percent to $1,072.71 after hitting its highest since May 2024 in the previous session, and palladium dipped 1.40 percent to $1,022.99, holding over its six-month peak.
