Gold prices were set for their best weekly gain in more than a month on Friday, as a softer dollar and growing concerns about the deteriorating fiscal outlook for the world’s biggest economy boosted the appeal of safe-haven assets.
In Dubai, gold rates held steady, with 24-carat gold at AED396 and 22-carat gold remaining at AED366.75. Additionally, 21-carat gold was at AED351.5, while 18-carat gold held at AED301.25.
Globally, spot gold rose 0.17 percent to $3,303.12 at 4:05 GMT. Bullion has risen 3 percent so far this week and is on track for its best weekly performance since early April. Meanwhile, U.S. gold futures climbed 0.06 percent to $3,297.14.
The dollar has lost more than 1 percent so far this week and is set for its worst weekly performance since April 7, making gold prices cheaper for holders of other currencies.
U.S. fiscal worries bolster gold’s safe-haven status
This week, trade optimism, which weighed on gold prices, was outweighed by worries about the U.S.’s fiscal situation, resulting in hesitancy towards U.S. assets and driving further gains in safe assets like gold.
The U.S. House of Representatives passed a sweeping tax and spending bill on Thursday, adding trillions of dollars more to the national debt. The “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.
Softer dollar supports yellow metal’s rise
This comes on top of U.S.-China trade tensions, which have been fueling worries about the economy. In addition, the prospects for further policy easing by the Federal Reserve continue to undermine the U.S. dollar and assist gold prices.
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.
The U.S. Department of Labor reported on Thursday that the number of Americans filing for unemployment insurance fell to 227,000 last week. This highlighted a resilient U.S. labor market, which provided a modest lift to the U.S. dollar.
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Other precious metals
As gold prices rose, the precious metals market saw mixed movement on Friday. Spot silver gained 0.13 percent to $33.12 while platinum rose 0.41 percent to $1,085.70. However, palladium dipped 0.21 percent to $1,012.68.
