Gold prices surged to a two-week high on Thursday as investors sought safe-haven assets amid mounting worries over the U.S. government’s rising debt and soft demand for long-term Treasury bonds.
In Dubai, gold rates rose across all purities: 24-carat gold gained AED3.5 to AED401.25 per gram, 22-carat increased by AED3 to AED371.75, 21-carat added AED3 to AED356.25, and 18-carat rose AED2.75 to AED305.50.
On the global stage, spot gold climbed 0.61% to $3,334.70 by 4:08 GMT, hitting its highest level since May 9. Meanwhile, U.S. gold futures rose 0.65% to $3,334.89. The U.S. dollar remained near a two-week low, making gold more affordable for buyers using other currencies.
U.S. Fiscal Outlook Darkens as Tax Cut Bill Advances
Gold’s upward momentum was fueled by a weakening dollar and growing fears of stagflation in the U.S. economy. The U.S. House of Representatives Rules Committee moved forward President Donald Trump’s expansive tax cut and spending bill, paving the way for a House floor vote expected soon. This bill could add between $3 trillion and $5 trillion to the national debt.
Investor concerns intensified following weak demand for a $16 billion auction of 20-year Treasury bonds on Wednesday, which pressured both the dollar and equity markets. The mood was further dampened by Moody’s downgrade of the U.S. triple-A credit rating last week.
In this environment of economic uncertainty and expectations of low interest rates, gold remains an attractive safe haven. The metal had touched a record high of $3,500.05 last month.
Dollar Weakness Continues Amid Fed Rate Cut Bets
The U.S. dollar’s recent decline reflects growing fiscal concerns and speculation that the Federal Reserve will cut interest rates further this year. Market participants now price in about 54 basis points of rate reductions by the end of 2025, with cuts expected to begin as early as October.
Geopolitical Developments
Adding to market uncertainty, Iran and the U.S. are scheduled to hold their fifth round of nuclear talks on May 23 in Rome, according to Oman’s foreign minister.
Mixed Trends in Other Precious Metals
Alongside gold’s gains, silver rose 0.64% to $33.59 per ounce. However, platinum slipped 0.35% to $1,072.71 after recently hitting its highest level since May 2024. Palladium also declined 1.40% to $1,022.99, maintaining a position above its six-month peak.
